Thursday, January 25, 2007

Summary: Briefing on Interchange Issues (

This marks our 625th posting on - The Credit Card Interchange Report.

The daily news and commentary updates are edited by entrepreneurs who know first hand about all the issues, as we are also the lead plaintiffs in the interchange battle (the first to file, back in June, 2005) .

Earlier today, Senator Christopher Dodd (D- CT) provided an opening statement during hearings in Washington that including mention that the "costs associated with these fees are expected to be between $30 and $40 billion this year alone."

As background for our growing universe of international readers, we are providing the following summary as an overview of the interchange fee issues impacting consumers and retailers. This informational web site was created to provide news and commentary updates only. None of the information posted on is intended to constitute legal arguments; it reflects only the opinions of its co-editors and not of any other plaintiffs or other parties involved in the merchant antitrust litigation. The information is not guaranteed to be correct, complete, or current. We make no warranty, express or implied, about the accuracy or reliability of the information posted by or at any other Web site to which this site is linked.


Interchange fees are the hidden fee collected by Visa® and MasterCard®-issuing banks every time a Visa or MasterCard cardholder makes a purchase with their credit or debit card. Annually, these issuing banks collect interchange fees totaling more than $30 billion in the U.S. alone. Although the Visa and MasterCard-issuing banks are ostensibly in competition with one-another, they do no compete on the interchange fees they charge. Instead, they set interchange fees collectively, which is a clear violation of U.S. Antitrust laws.

Along with millions of other merchants, we believe that, absent collusion between the issuing banks, interchange fees would be much lower. The average rate in the U.S. is 1.7%, in Australia it is .55% and in the UK it is just .7%. In Canada, the interchange fee for PIN-based debit cards is zero, just as are charges for check writing, although there are significant costs to clear and process paper checks. Our hope is that the judge will rule that "fixed interchange" is illegal, allowing for market competition between the issuing banks that will result in lower interchange fees. This will benefit all U.S. merchants and consumers (lower merchant costs translate to lower consumer prices). We are also seeking damages for the harm already inflicted on merchants by Visa, MasterCard, and their issuing banks in the form of the existing, artificially-high interchange fees.