Merchants Applaud Senate Scrutiny of Credit Card Fees
Washington, D.C. - December 4, 2007 - The Merchants Payments Coalition is encouraged by a congressional hearing calling into question unfair credit card practices. Today's hearing, held by the Senate Permanent Subcommittee on Investigations, is among several held this year that are scrutinizing the unfair practices imposed on consumers and merchants by credit card companies.
"This hearing is another example of how serious the issue of credit card abusive practices is for everyone," said MPC Chairman Mallory Duncan, senior vice president and general counsel at the National Retail Federation. "The credit card industry has profited from outrageous fees, and congressional attention is beginning to shed some light on a broken system."
One of the most outrageous fees most people have never heard of is the "interchange" fee, a percentage of each transaction that Visa and MasterCard along with their member banks collect from retailers every time a credit or debit card is used to pay for a purchase. The fee varies with type of merchant, transaction and card, but averages close to 2 percent per transaction.
Unlike other credit card fees, credit card companies don't show interchange on monthly statements while their rules make it virtually impossible to show it on receipts and make cash discounts very difficult to offer. Instead, stores are effectively required to include the fee in the price of merchandise, meaning higher prices for all customers, even those who pay by cash or check. The hidden fee cost consumers and merchants $36 billion last year and is expected to top $40 billion this year.
Earlier this year, the Senate Banking Committee held a hearing on the billing, marketing and disclosure practices of the credit card industry. In addition, Duncan testified on behalf of the MPC during a July hearing on credit card interchange held by the House Judiciary Committee's Antitrust Task Force. Duncan argued that Visa and MasterCard practices in setting interchange rates have constituted a violation of federal antitrust laws. MPC advocates a payment system that is transparent and open to competition.
The MPC is a group of nearly 30 associations representing retailers, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses that accept debit and credit cards 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 more information, visit http://www.unfaircreditcardfees.com/.