A Boston Federal Reserve, paper published last Wednesday, looks at the winners and the losers from the credit card payments industry, and finds that low income households effectively subsidise the card payments of high income households, as merchants choose to compensate the cost of credit transfers through higher sales costs.

Scott Schuh, Oz Shy, and Joanna Stavins, the paper's authors, say the decision to pay by credit card involves merchant fees, retail price increases, a nontrivial transfer