| status
of interchange fees
United States
The collective setting of interchange fees by Visa and MasterCard
member banks has emerged as a major public policy concern in the
United States. The Congress, the Federal Reserve, and the courts
are looking into the credit card fee. Consider:
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In early June 2006, Senator Arlen Specter (R-PA), the Chairman of the Senate Judiciary Committee, announced his intention to hold a hearing on “Credit Card Interchange Rates: Antitrust Concerns?” |
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The Kansas City Federal Reserve Bank held a conference on
interchange fees in May 2005. |
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On October 6, 2005, the House Energy and Commerce Committee
approved the “Gasoline for America’s Security Act
of 2005” (H.R.3893), which contained language directing
the Federal Trade Commission to analyze the role and cost of
credit card interchange rates on retail motor fuel prices. |
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Interchange is also a growing public policy concern at the
state level. Two states, New York and Kentucky, introduced legislation
in 2006 that would mandate that sales tax cannot be subject
to interchange fees levied by Visa and MasterCard. Additionally,
legislation was recently introduced in Alabama urging the U.S.
Senate to conduct hearings on interchange fees. |
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Additionally, more than 50 lawsuits, with plaintiffs representing
hundreds of thousands of merchants, have been filed in federal court
claiming that interchange-related practices violate federal
antitrust laws. |
International
Anti-trust authorities across Europe, Great Britain, and Australia,
have condemned these collectively set fees and are bringing the
interchange fee under control. Yet Visa and MasterCard are charging
Americans among the highest credit card interchange fees in the
world. U.S. interchange fees are close to 2%, while those in the
UK are about 0.7% and Australia averages 0.55%. This difference
translates into hundreds of dollars in added costs to the average
American family!
Given the size of the U.S. economy, one would expect the MasterCard
and Visa systems in the U.S. to have scale and scope that would
permit the card associations to charge Americans a lower price than
other countries.
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