FOR IMMEDIATE RELEASE
Contact: Christy Moran, (202) 974-8299

HIDDEN FEES BRING BIG PROFITS TO CREDIT CARD COMPANIES

WASHINGTON, D.C. – January 8, 2007 – Visa, MasterCard and their member banks collected billions of dollars in secret credit card fees from unsuspecting consumers during the recent holiday shopping season, merchants are saying this week in newspaper and radio ads.

“Turns out it wasn't the Grinch who stole Christmas after all,” a print ad appearing in Capitol Hill newspapers and elsewhere said. “The credit card companies took a bite out of every present you bought with their cards.”

“I grew up believing that if anyone stole Christmas it was the Grinch,” a similar radio ad said. “But it turns out the credit card companies stole Christmas by taking a bite out of every present you bought with their cards.”

The ads were placed by the Merchants Payments Coalition, a group of merchant trade associations formed to address soaring credit and debit card interchange fees. Interchange is a percentage of each transaction that Visa and MasterCard banks collect from retailers every time their credit or debit cards are used to pay for a purchase. The fee varies with type of merchant, transaction and card, but averages close to 2 percent for most credit card and signature debit transactions. Interchange totaled $30.7 billion in 2005, up 17 percent over 2004 and an 85 percent increase since 2001.

Unlike other credit card fees that show up on a monthly statement, the interchange fees paid by consumers are not disclosed to cardholders. Visa and MasterCard’s non-negotiable contracts require merchants to include the Visa and MasterCard fees in the price of merchandise, forbidding them from being shown on cash register receipts and effectively barring cash discounts.

“Interchange is the biggest credit card fee you’ve never heard of,” the ads said. “Visa and MasterCard don’t want consumers to know about it.”

The advertisements call the fees unfair to consumers, noting that they are twice what consumers pay in late fees but set in secret by Visa and MasterCard, which together control 80 percent of the credit card market.  

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