Posted on 07/24/2007 11:26:39 AM PDT by outfield
Washington, D.C. - July 20, 2007 - Merchants welcomed lawmaker concern over credit card interchange practices at a hearing this week in the House Judiciary Committee's Antitrust Task Force. The Merchants Payments Coalition (MPC) chairman and senior vice president and general counsel of the National Retail Federation Mallory Duncan told the panel that the collective setting of interchange fees by Visa and MasterCard is a violation of federal antitrust laws. MPC advocates a payment system that is transparent and open to competition.
Unlike other credit card fees that show up on monthly statements, the credit card interchange fee is hidden. Visa and MasterCard rules make it practically impossible for merchants to tell customers how much they are really paying.
"Why in the world should this committee permit a gag rule to be in place keeping the public from knowing what they're being charged, especially when there's more profit in a gallon of gas for the credit card companies than a gas station?" asked Congressman Darrell Issa (R-CA) said in reference to Visa last year saying it would disclose full rules to merchants but only if they signed a Non-Disclosure Agreement.
Well, the House Judiciary Committee's Antitrust Task Force held a hearing on interchange last Thursday and Congressman Issa had some great questions regarding the card companies distaste for disclosure. Hopefully this will lead to some improvements.
Merchants of Menace.........
In my experience, industry coalitions, like this one, that uphold high fees, monopoly power and insider deals, tend to do much better under Democratic Administrations than under Republican ones.
However, both sides are corrupted by the kind of money these entities can throw around.
Privacy and telemarketing laws, that pretty much exempted these guys, are a good example of what they can accomplish behind the scenes.
It should also be noted that credit card customers themselves aren't the ones who actually pay these fees. It's the merchants who pay these fees, and they generally pass this expense on to all of their customers, not just to the credit card customers.
Yes, thanks for clarifying. That point was covered in the last thread, but well worth repeating. It’s also one of my main gripes, that no matter to what degree interchange bothers you , it’s not something you can avoid simply by paying in cash only.
Right — but in that respect it’s really no different than the way a merchant passes along the costs associated with any banking fees, service charges, etc.
Right- except interchange fees are up 17 percent from 2005 and 117 percent since 2001. Plus, only 13% of the what is charged for “interchange” actually covers processing costs. So this is more than just merchants passing on the cost of legitimate business expenses.
Not to mention, their is a severe lack of disclosure so we don’t have much proof to counter the claims that the card companies act as price-fixing cartels in setting these fees.
At some point wouldn't you think a major retailer like Wal-Mart is going to exert a lot of pressure on Visa, MasterCard, etc. to negotiate substantially lower interchange fees? I used to work for a major club-type wholesaler (sort of like a Costco), and we refused to accept any credit cards that charged us more than a minimal interchange fee.
Actually, I do believe Wal-Mart did exactly that. They stopped taking mastercard for several months till they came in line.
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