(via PRNewswire)
WASHINGTON, Feb. 13 /PRNewswire-USNewswire/ -- Visa, MasterCard andtheir affiliated banks will receive a one-day Valentine gift of $169 million this year because of hidden "interchange" fees collected on transactions during the holiday, the Merchants Payments Coalition (MPC) said today.
"Visa and MasterCard are plucking a few petals off every rose this Valentine's Day," MPC Chairman Mallory Duncan said. "Whether it's a bouquet of flowers, a box of chocolates or a diamond ring, credit card companiesare seeing a windfall because of their secret interchange fees that driveup the price of virtually every product in virtually every store. In an atmosphere of romance, interchange is a love-hate relationship -- Visa and MasterCard love to charge these fees and consumers hate to pay them."
Largely unknown to most consumers, interchange is a percentage of each transaction that Visa and MasterCard collect from retailers every time a credit or debit card is used to pay for a purchase. The fee varies with type of merchant, transaction and card, but averages close to 2 percent formost credit card and signature debit transactions. Visa and MasterCard interchange fees totaled $30.7 billion in 2005, up 17 percent from 2004 and 85 percent since 2001. The average family in the U.S. pays more than $300 every year in hidden interchange fees.
Valentine's Day spending is expected to total $16.9 billion this year, according to the National Retail Federation. Credit cards typically account for about half of consumer transactions, so at 2 percent that amounts to$169 million, according to MPC calculations.
Unlike other fees that show up on cardholders' monthly statements, interchange fees are not disclosed to consumers. Visa and MasterCard's non-negotiable contracts effectively require merchants to include the fees in the price of merchandise, forbid them from being shown on cash register receipts and effectively bar cash discounts. A recent MPC poll found that 68 percent of consumers surveyed had never heard of interchange, but 94 percent thought the fees should be disclosed and 91 percent felt Congress should require disclosure from the card companies."
The Merchants Payments Coalition, a group of nearly 30 associations representing retailers, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses that accept debit and credit cards, is fighting for a more competitive and transparent card system that works better for consumers and merchants alike. The coalition's member associations collectively represent about 2.7 million stores withapproximately 50 million employees.
For further information, please visit unfaircreditcardfees.com
