Merchant group welcomes senate's critical look at credit card interchange fees

By Jeremy M. Simon

Business group the Merchants Payments Coalition on March 7, 2007, welcomed comments from Senator Norm Coleman (R-MN) regarding the interchange fees paid by merchants during customers' credit card transactions.  

During a hearing of the Senate Homeland Security and Government Affairs Committee's Permanent Subcommittee on investigations, which has cast a critical eye on a number of credit card industry practices, Sen. Coleman charged that "interchange fees can significantly impact the prices charged by merchants and retailers."

Merchant Payments Coalition Chairman Mallory Duncan applauded the comments made by Sen. Coleman, the Subcommittee's Senior Republican, for focusing on what the group views as an abusive credit card practice. 

Duncan, who is also senior vice president and general counsel at the National Retail Foundation, added that although interchange fees never show up on monthly credit card statements, they end up costing U.S. consumers more than $30 billion a year by increasing the price of their purchases.

Interchange fees are the percentage of every credit card or debit card payment that Visa and MasterCard charge merchants, and vary depending on type of merchant, transaction and card. 

On the other side of the argument, critics charge that merchants have the freedom to choose the payment method they accept, which allows for competition in fee-setting.  They also highlight the efficiency of the uniform method for establishing interchange fees, since without it stores would be forced to negotiate with thousands of different banks in order to process customers' credit card purchases.

The Merchants Payments Coalition is a collection of almost 30 associations representing retailers, supermarkets, pharmacies, convenience stores, gas stations, Internet merchants, and other businesses that accept credit cards and debit cards. 

The MPC's member associations together represent about 2.7 million stores with approximately 50 million employees.  Its goal is what it considers to be a more competitive and transparent card system that functions more effectively for both merchants and consumers.

Published: March 13, 2007

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