Should Congress take control and manage credit card fees charged on every transaction? Retailers say yes.
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On July 19, retailers asked Congress to move in and control how much and in what manner credit card companies and issuing banks charge retailers for processing credit card transactions. Retailers are requesting greater regulation on interchange rates, the fee they are charged for processing a credit card transaction.
Additionally, the credit card association or company, such as Visa or MasterCard, bills the merchant monthly for processing transactions. According to a Visa spokeswoman, the fee amounts to around $0.05 per transaction. This breakdown, based on Visa’s average 1.75 percent interchange rate, may vary.
Each retailer and type of transaction has its own agreement. Grocery stores, which were reluctant to take credit card payments until recently, have a low merchant fee as an incentive to accept plastic. Meanwhile, online merchants, which have few choices aside from taking credit cards, have steeper fees than most other retailers.
Representatives of Visa and MasterCard, testifying at a Senate Judiciary Committee hearing, rejected allegations that they are colluding to set high rates, noting that challenges from debit cards and other new payment options mean they must remain competitive. Also, Visa announced this week that it will make interchange rate factors available online to participating retailers who sign a nondisclosure agreement.
Yesterday, Committee Chairman Arlen Specter (R-Pennsylvania) persuaded the Visa representative to make those rules available to the committee, a move which the Merchants Payment Coalition Inc., a collection of retailers, hailed as an “enormous first step” toward more transparent rules.