NRF backs credit card fee control efforts
By Staff -- Playthings, 5/9/2008 10:18:00 AM
WASHINGTON—The National Retail Federation is publicly supporting antitrust legislation scheduled to be discussed this month by a congressional committee that would require credit card companies to negotiate with retailers over rising credit card processing fees.
“This bipartisan piece of legislation is a sensible, market-oriented solution to the escalating problem of credit card ‘interchange,’ a hidden fee that is assessed against a merchant every time a credit or debit card is used,” said Steve Pfister, NRF’s senior vice president for government relations said. “In a functional, competitive market, one would expect that the cost of accepting credit and debit cards would decrease over time as transaction volume increases, fraud risks go down and technology improves, yet interchange fees continue to skyrocket.”
Rising processing fees, which have grown an average of 17 percent annually in recent years, are projected to cost retailers and their customers $48 billion in 2008, according to NRF. Those fees—passed along to consumers in the form of higher retail prices—cost the average consumer household an estimated $350 a year.
“On the consumer side, the payments industry is very competitive, with banks vying for customers to carry their cards,” Pfister added. “That is absolutely not the case for American businesses, both large and small, who must accept plastic payments in order to remain viable. Since Visa and MasterCard control over 80 percent of the payments card market, retailers are forced to live by whatever rates and terms the credit card giants dictate.”
Last summer, in testimony before the Judiciary Committee’s Antitrust Task Force, NRF argued that Visa and MasterCard operate “as illegal price-fixing cartels in violation of antitrust law.”
Pfister’s comments came in a letter to members of the House Judiciary Committee, which is expected to hold a hearing May 15 on H.R. 5546, the Credit Card Fair Fee Act of 2008.
Sponsored by committee Chairman John Conyers (D-Mich.), the bill would require credit card companies possessing “substantial market power” to negotiate with merchants to reach a voluntary agreement on credit card terms and conditions. If an agreement cannot be reached, both sides would be required to submit their final offers to binding arbitration by a three-judge panel appointed by the Department of Justice and Federal Trade Commission.
