NACS President Blasts Credit-Card Fees
ALEXANDRIA, Va. (3-11-06) -- Henry O. Armour, president and CEO of the National Association of Convenience Stores, testified before the House Energy and Commerce Committee’s Subcommittee on Commerce, Trade and Consumer Protection on the industry’s long struggle with credit-card interchange fees, reported NACSOnline."
Interchange fees are levied in a market that is broken and something must be done to fix it," Armour said. "This hearing is an important step toward informing Congress and the public about the impact that high interchange rates have on U.S. consumers.
There has not been nearly enough information and discussion about these fees in the past, and we applaud you for your willingness to examine them." NACS was invited to testify as a result of its testimony in September 2005 before the full Committee regarding gasoline prices and the increasing amount of money that credit-card companies take out of every gallon of gasoline purchased, reported NACSOnline.
Armour outlined in the report four fundamental problems with the current interchange market. First, he noted that due to the market power of the card associations, retailers have no choice about whether they accept cards. Second, the card associations exploit their market power by driving up fees and by veiling these fees and their rules in secrecy. Third, these fees are bad for consumers -- particularly some middle- and many lower-income consumers who do not have easy access to credit and debit cards. And fourth, consumers in the United States pay much more for interchange than other comparable countries.
Most consumers have no idea that they pay interchange fees, which are hidden in the price of virtually everything they buy and total an estimated $27 billion annually in the United States, according to NACS. Consumers do not know about these hidden fees because the credit card companies go through great lengths to assure that consumers remain in the dark about these fees, Armour said in the report."
It's not just consumers who are left in the dark; Visa and MasterCard refuse to fully disclose their operating rules to retailers," Armour said. " It is remarkable that they make retailers agree to abide by all of their operating rules in order to be able to accept their cards."Ultimately, consumers pay the price. According to NACS, the average American family pays $331 in interchange and related fees every year. And that is true whether or not that family uses credit or debit cards. Because these fees are hidden in the cost of virtually everything consumers buy, even cash-paying consumers ultimately pay for them, according to NACSOnline."
This results in a nasty, regressive charge," Armour said. "Consumers with fewer resources whose credit does not allow them to have credit cards or do not have debit cards pay this fee like everyone else -- as do consumers with credit cards who pay high interest rates, annual fees and have no rewards or miles programs."
[source: Convenience Store News]
