WASHINGTON, May 15 MPC-FairFeeAct-reax
Bi-partisan Legislation Aims to Reduce Hidden Credit Card Interchange Fee Through Transparency, Market-Based Remedy
WASHINGTON, May 15 /PRNewswire-USNewswire/ -- Merchants welcome encouragement from Democrats and Republicans alike in support of HR 5546, the Credit Card Fair Fee Act, bi-partisan legislation that would end credit card industry price fixing, which is the subject of a hearing today by the House Judiciary Committee Antitrust Task Force.
The Credit Card Fair Fee Act would provide a market-based mechanism to address the sky-rocketing costs of the credit card interchange fee, a $42 billion dollar a year credit card fee paid by merchants and consumers through higher retail prices.
Members of the Antitrust Task Force will hear testimony concerning the extraordinary size and scope of the interchange, which adds nearly $2 to the cost of every $100 Americans spend in stores when they pay by credit card.
"It is clear that the price for the cashless society is way too high if you let the credit card industry fix the rate.," said Tom Robinson, CEO of San Jose, CA based convenience store and gas chain Rotten Robbie. Robinson is also serving as vice chairman of government relations for of the National Association of Convenience Stores, a member of the MPC. In 2007, convenience stores, which sell 80 percent of the fuel purchased in the United States, paid more than twice as much to the credit card industry ($7.6 billion) as they made in pre-tax profits ($3.4 billion).
Merchants Payments Coalition (MPC) counsel Stephen Cannon told the panel that the collective setting of interchange fees by Visa and MasterCard is a violation of federal antitrust laws. MPC advocates a payment system that is transparent and open to competition.
The current interchange fee-setting system excludes merchants from the negotiation process and therefore, banks compete to charge the higher rate. In fact, with more than 80 percent combined market share, Visa and MasterCard each separately 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.
"There's no transparency and there's no negotiation," said Mallory Duncan, the chairman of the MPC and senior vice president and general counsel of the National Retail Federation. "As long as rising rates are kept top secret, consumers have no way of knowing the extra costs they are paying through higher prices," said Duncan. Interchange costs have increased 150% since 2001.
Interchange fees inflate the cost of nearly everything consumers buy even when they pay by cash. The average family paid close to $400 in interchange fees in 2007, according to the MPC.
Over the last three years, unfair credit card practices, policies and fees have been scrutinized by the public, consumer groups, the Federal Reserve, and Congress. Interchange fees have been the subject of hearings three times in recent years under both the Republican and Democratic Congresses.
Bi-partisan co-sponsors of the Credit Card Fair Fee Act include 15 Republicans and 15 Democrats.
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
SOURCE Merchants Payments Coalition
