ALEXANDRIA, Va. -- NACS applauded the decision by Senate Judiciary Committee Chairman Arlen Specter (R-PA), to hold a hearing on the anti-competitive fee-setting practices of credit card companies.
The June 16 edition of Washington Report announced that the Senate Judiciary Committee plans to hold a hearing on "Credit Card Interchange Rates: Anti-trust Concerns?" on June 28. On Friday, NACS learned that the hearing date has been rescheduled.
“We are delighted to see the Senate investigating anti-competitive price-fixing practices at Visa and MasterCard that take billions of dollars out of consumers’ pockets every year,” said NACS President and CEO Hank Armour. “American consumers pay some of the highest credit card interchange fees in the world, yet most consumers don’t even know that these fees exist because Visa and MasterCard make it virtually impossible for retailers to tell them. We think the time has come to put an end to Visa and MasterCard’s illegal price-fixing, their lack of honesty with the public and the record windfall profits they’re making as a result.”
In 2005, credit card fees cost the convenience store industry, which sells an estimated three-quarters of all the fuel purchased in the country, a staggering $5.3 billion, according to the NACS 2006 State of the Industry report.
Interchange is a percentage of each transaction that Visa and MasterCard banks collect from retailers every time their credit or debit cards are used to pay for a purchase. The fee varies with type of card, size of merchant and other factors, but averages close to 2 percent for credit card and signature debit transactions. Total credit and debit card interchange collected by Visa and MasterCard amounted to $26.32 billion in 2004, according to the Nilson Report, a business magazine that covers the credit card industry.
Unlike other credit card fees that show up on a monthly statement, the interchange fees paid by consumers are not disclosed to cardholders because Visa and MasterCard forbid merchants from disclosing them on receipts.
“We wish to thank Senator Specter for scheduling this very significant hearing,” said Mallory Duncan, chairman of the Merchants Payments Coalition (MPC). The MPC, a coalition of about 20 trade associations including NACS, represents retailers, restaurant, supermarkets, drug stores, convenience stores, gas stations, on-line merchants and other businesses that accept debit and credit cards and is fighting for a more competitive card system.
“The Senate Judiciary Committee is an important venue to look into credit card companies and their illegal price-fixing practices in setting interchange fees,” added Duncan, who is the senior vice president and general counsel at the National Retail Federation.
“Our members believe it’s time to hold Visa and MasterCard accountable and put an end to their illegal price-fixing, their lack of openness with the public and the record windfall profits they’re making as a result,” said Duncan.