Critics challenge retailers on opposition to interchange fees

Merchant opposition to the interchange fees charged by credit card banks has been a big news item in the world of credit cards lately.  Retailers have charged that these fees raise prices, with some having gone so far as to take out ads in newspapers stating that interchange fees end up punishing the consumer.  But according to some critics of the merchants, they do not have the best interest of the credit card user in mind when they oppose these fees. 

Many stores have asked the government to lower interchange fees, which the merchants consider to be too high.  In lawsuits and appeals to state and federal government, retailers allege that the method of pricing the fees is anticompetitive.  Merchants note that they have little option but to accept interchange fees for taking credit cards. 

The argument that the interchange fees violate antitrust laws (because MasterCard and Visa establish uniform fees for member banks to charge) has so far been rejected by courts, which have noted that there are other credit card and payment methods, and because of the efficiencies of this pricing system. Without the fee-setting method in place, the card processors say, stores would need to negotiate with thousands of different banks to process customers' credit cards.     

In Australia, such cost transfers took place when the government listened to merchants and set the fees.  After the price controls were instituted in Australia, consumers there encountered higher annual fees and fewer reward programs such as airline miles.  According to a study, 30 to 40 percent of banks' lost interchange revenues were simply passed on to cardholders via higher costs.  Local newspaper the Australian reported that these consumers experienced no corresponding decline in merchandise prices -- although Aussie retailers did save over $450 million in U.S. dollars.    

Critics expects that if interchange fees are lowered in the U.S., the same would happen.

Join the discussion
We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.

The editorial content on is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company's business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.

Weekly newsletter
Get the latest news, advice, articles and tips delivered to your inbox. It's FREE.

Updated: 03-26-2019