HIDDEN CREDIT CARD FEES UNDER CONGRESSIONAL SCRUTINY
Ad Campaign Says U.S. Interchange Fees Are Among the Highest in the World
Washington, D.C. - May 12, 2008 - Visa, MasterCard and their member banks collected $42 billion in secret credit card fees last year, and the result is drawing attention from Congress, merchants are saying this week in newspaper ads. The credit card interchange fee, along with legislation recently introduced to bring fairness to the broken market of how the fee is set, is the subject of a House Judiciary Antitrust Task Force hearing that will take place on Thursday, May 15.
"Despite increasing volume, more efficient technology, and lower losses from fraud in processing credit card transactions, credit card interchange fees in the U.S. are among the highest in the world," reads one of the print ads that are appearing in Capitol Hill newspapers and elsewhere.
The ads were placed by the Merchants Payments Coalition, a group representing the nation's retailers-ranging from small businesses to Fortune 500 companies-and formed to address soaring credit 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 by consumers to pay for a purchase. The fees vary with the type of merchant, the transaction and the card, but average about $2 of every $100 spent using credit cards. These fees inflate the cost of nearly everything consumers buy-even when they pay by cash.
With a collective market-share of approximately 80 percent, Visa and MasterCard operate like price-fixing cartels, each one imposing oppressive credit card interchange fees and rules on merchants on a ‘take-it-or-leave-it' basis. Credit card industry policies and practices make it practically impossible for merchants to know how much they are really paying in credit card fees, or why.
The ad also states that Visa and MasterCard "use their market power to raise interchange fees well above what a competitive market would bear."
Bipartisan legislation was introduced in March in the House by Rep. John Conyers (D-MI) and Rep. Chris Cannon (R-UT). Called, the Credit Card Fair Fee Act, H.R. 5546 is the only solution that would create a competitive market outcome and bring transparency to the broken credit card market by allowing merchants a seat at the negotiating table.
"Interchange is the biggest credit card fee you've never heard of," the ads said.
The Merchants Payments Coalition (MPC), UnfairCreditCardFees.com, is a group of retailers, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses who are fighting against unfair credit card fees and fighting for a more competitive and transparent card system that works better for consumers and merchants alike. The coalition's member associations collectively represent about 2.7 million stores with approximately 50 million employees. For further information, please visit http://www.unfaircreditcardfees.com.