facts about fees

Credit card late fees take a big bite out of consumers’ wallets. But Visa and MasterCard feed off an even bigger revenue source - interchange fees they charge on every purchase - and they don’t want you to know about it.

Interchange is the biggest credit card fee you’ve never heard of … and it’s outrageous

Americans pay a hidden fee on virtually every transaction they make, whether they use a credit card or not, costing consumers tens of billions of dollars a year. This fee, called interchange, is a percentage of each transaction that Visa and MasterCard banks collect from merchants every time a consumer uses a credit or debit card to pay for a purchase. The fee varies with type of card, size of merchant and other factors, but averages close to 2 percent for credit card and signature debit transactions. These hidden fees drive up the cost of goods and services for all consumers whether they pay with plastic, cash or check.

MasterCard and Visa wrote the rules to keep consumers in the dark and the fees keep rising

Few consumers know about interchange fees because MasterCard and Visa wrote the rules that make it virtually impossible to tell consumers how much interchange fees cost them. The public has the right to know how much credit card interchange fees cost them, just like ATM fees. Consumers benefit from full disclosure, transparency, and the resulting competition.  Visa member banks collectively agree to charge the same interchange rates.  MasterCard member banks do, too.  This price-fixing hurts consumers and must stop. Even though credit card use is at an all time high in the U.S., credit card interchange fees keep going up.

Interchange fees affect every American

The average household pays hundreds of dollars annually in hidden credit card interchange fees each year. This is true even if they don’t use any debit or credit cards because the cost of the fees is built into the price of nearly all goods and services.

Credit card fees are escalating

Transactional costs like credit card interchange fees should drop with volume, but instead these fees keep rising. In 2001, Visa, MasterCard and their issuing banks collected $16.6 billion in credit card interchange fees. By 2005, these fees increased to $30.7 billion - more than the total amount of penalty fees and ATM fees combined.

Credit card interchange fees are anti-competitive

In virtually every other marketplace, competition results in lower prices, but Visa and MasterCard control a system that is fundamentally anti-competitive.

We have a system where Visa and MasterCard want to attract more issuing banks, and in order to do so, they actually vie to charge higher interchange fees instead of the lower rates that would benefit consumers. These are fees that banks collect and all consumers pay.

The banks that make up Visa and MasterCard have colluded to set these interchange fees, operating in price-fixing cartels that would violate federal antitrust law in other industries.

Antitrust authorities across Europe, in Great Britain, and in Australia, have condemned these collectively set fees and Visa and MasterCard rules as anti-competitive and have moved to bring the interchange fee under control.

Americans pay some of the highest credit card fees in the world

Visa and MasterCard charge Americans among the highest credit card interchange fees in the world - averaging close to 2 percent for credit card and signature debit transactions, compared with only 0.7 percent in the United Kingdom and 0.55 percent in Australia. The difference translates into hundreds of dollars in added costs to the average American family.

The fact that other consumers in countries around the world are charged substantially lower credit card interchange fees than in the U.S. indicates that there is room to reduce these rates and still cover the cost of the actual transactions.

Americans should have lower credit card interchange fees like consumers are getting in virtually every other industrialized country. Why should Americans pay higher fees than consumers pay in other countries?