Merchants Welcome House Legislation to Crack Down on Excessive Credit Card Fees
Washington, D.C. - June 11, 2008 - Today Congressman Peter Welch (VT-AL) introduced legislation to crack down on excessive credit card interchange fees and unfair restrictions imposed on small businesses and store-owners that impact all consumers. Credit card interchange fees cost Americans $42 billion last year.
"We welcome this effort to create transparency for credit card interchange fees and bring disclosure to merchants and consumers alike," said John J. Motley III, senior vice president of government and public affairs, the Food Marketing Institute, a member of the Merchants Payments Coalition (MPC).
Currently, credit card interchange rates are set in secret, hidden from view and exclude merchants from the negotiating process. Raising interchange fees is how Visa and MasterCard encourage banks to issue more credit and debit cards - as long as rising rates are kept top secret, consumers have no way of knowing the extra costs they are paying through higher prices.
"The fees are so excessive and the credit card industry policies and practices make it practically impossible for retailers to know how much they are really paying in credit card fees or why," said Karen Fountain of Burke, Virginia, owner of Flowers ‘n' Ferns flower shop.
Rep. Welch's legislation will require credit card companies to disclose their interchange rates, terms, and conditions to consumers, businesses, and the public. In addition, it will empower the Federal Trade Commission to review these rates and rules and prohibit any practices that violate consumer-protection or anti-competitive laws.
Joining Rep. Welch at a press conference today was Oren Molovinsky, general manager of Mie N Yu restaurant in Washington, DC; Karen Fountain of Burke, Virginia, owner of "Flowers ‘n' Ferns" flower shop; and, Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group.
"Virtually every developed economy in the world has found these fees abusive and illegal -- even at levels far lower than what Americans pay," said Motley. Americans pay among the highest credit card interchange fees in the industrialized world, nearly 3 times what British consumers pay. The EU Competition Commission last December ruled MasterCard's credit card interchange fee setting system to be in violation of competition laws, ordering the card company to reduce its interchange fees. The same commission recently announced a formal inquiry into Visa Europe on the same issue.
Interchange fees amount to approximately $2 of every $100 spent using credit cards. These fees inflate the cost of nearly everything consumers buy whether they use plastic, cash, check or food stamps. In effect, most consumers are taking two hits to their wallet: one from the interchange fee and ones from the fees in their statement.
Last week, Sen. Richard Durbin (D-IL) introduced the "Credit Card Fair Fee Act of 2008," which addresses just the credit card interchange fee. The House version of the bill was introduced in March by Rep. John Conyers (D-MI) and Chris Cannon (R-UT) and has received bipartisan support.
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.