Monday, July 10, 2006

What's Wrong With Merchant Interchange Fees (

The Merchants Payments Coalition (MPC), representing the nation’s retailers, department stores, supermarkets, drug stores, convenience stores, gas stations, and on-line merchants has posted several key issues regarding interchange fees on its website. MPC represents more than 2.7 million locations and approximately 50 million employees.
  • Very few Americans know that they pay a hidden fee on virtually every transaction they make, whether they use a credit card or not.
  • This fee, called interchange, is a percentage of each transaction that Visa and MasterCard collect from merchants every time credit or debit cards are used to pay for a purchase.
  • Interchange fees average close to 2% on each card transaction and last year this fee cost consumers more than $26 billion.
  • This interchange fee system is tremendously unfair because ultimately all consumers pay for this hidden fee.
  • The average American family pays hundreds of dollars in interchange every year.
  • And that is true whether or not that family uses a single credit or debit card.
  • Because these fees are hidden in the cost of virtually everything we buy, even cash-paying consumers ultimately pay for them.
  • Even worse, 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 wrote the rules that make it virtually impossible to tell consumers how much interchange fees cost them.
  • Visa and MasterCard control a system that is fundamentally anti-competitive.
  • Visa member banks collectively agree to charge the same interchange rates.
  • MasterCard member banks do, too.
  • This price-fixing hurts consumers.
  • It’s time to force credit card companies to explain their fees, practices and policies in public.

{source: Extracted from the MPC website,]