Bankers, retailers square off over credit card fees

East Bay Business Times ^ | April 6, 2007 | Cynthia Yeldell

[Politics4Fun]

Retailers, bankers and credit card companies will square off on Tennessee's Capitol Hill next week over interchange fees.

Interchange fees are the charges merchants pay when customers use a credit or debit card.

Retailers say the fees are rising and they want lawmakers to cap them. They requested the hearing that will be held Tuesday at 1:15 p.m. before the Senate Commerce Committee on the Legislative Plaza.

Bankers say the fees are the cost of doing business and benefit retailers.

"They are shifting the payment risk and collection cost to somebody else," said Tim Amos, senior vice president and general counsel for the Tennessee Bankers Association.

Jarron Springer, president of the Tennessee Grocers Association, said the fees continue to rise and are getting out of control.

"Small business is who these interchange fees really hurt," Springer said.

[taxcontrol]

I know some businesses used to charge a “credit processing fee” when you used credit instead of cash. I wonder why such fees are not passed on to the consumer.

[Blagden Alley]

I’m guessing, but “competition”. Too many customers will just shop elsewhere. For now, retailers have to eat it.

If they all did at once, however...

Nah. Someone would break ranks.

[MARTIAL MONK]

Usually it’s in the contract. No processing fees and no discounts for cash.

[PAR35]

This is why Wal Mart and Home Depot wanted to set up their own banks - so they could do their own processing.

[upchuck]

I wonder why such fees are not passed on to the consumer.

You think the fees are not passed to the customer? Think again!

[Politics4Fun]

The signs that are often placed next to registers that state a minimum amount for credit card purchases are also forbidden in most contracts. That’s why the signs are usually written on something temporary like a piece of paper that can be quickly discarded.

[goldstategop]

Retailers have to share the loot with the banks and they resent having their cut of the profits gobbled up by credit card processing fees.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus

[Politics4Fun]

The fees are definitely passed along. Just last year, the average family paid about $300 in interchange fees. And note that I didn't say families that use credit cards, I said all families, even if they don't even own a credit card. And interchange is just one fee!

[SledgeCS]

I work in the credit card process industry and interchange rates are a nightmare to compute. They vary depending on numerous items. Such as Credit or Debit purchase, some banks and retailers charge up to $0.75 per transaction. How long between the authorization of the charge to the settlement, debit is instant credit is not. Other factors are does the transaction contain Track I or Track II data or is it keyed.

I have seen interchange fees that range up into the hundreds of dollars.