WASHINGTON, Jul 16, 2008 (BUSINESS WIRE) -- The National Retail Federation urged the House Judiciary Committee to approve legislation scheduled for a vote today that would require Visa and MasterCard to negotiate over a hidden credit card fee that costs the average family more than $400 a year."At a time when Americans are struggling to pay for groceries and to fill the gas tank, doing something about a hidden fee that drives up the cost of basic necessities should be one of Congress' top priorities," NRF Senior Vice President for Government Relations Steve Pfister said. "This legislation is a sensible solution to an escalating problem that's costing consumers more every day."
"In a functional market, one would expect that the cost of accepting credit cards would decrease over time as transaction volumes increase, fraud risks go down and technology improves, but interchange fees continue to skyrocket," Pfister said. "Credit card companies continue to impose these fees on retailers and consumers on a take-it-or-leave-it basis while pretending that they're no different than any other cost of doing business. If they really aren't any different, then they should be subject to fair and open negotiation like any other cost."
The Judiciary Committee is scheduled to consider H.R. 5546, the Credit Card Fair Fee Act of 2008, during a voting session this morning. Sponsored by Chairman John Conyers, D-Mich., and committee member Representative Chris Cannon, R-Utah, the bill would require credit card systems possessing "substantial market power" to negotiate with merchants to reach a voluntary agreement on credit card terms and conditions. If an agreement could not be reached, both sides would be required to submit their final offers to binding arbitration by a panel of antitrust experts appointed by the Department of Justice and Federal Trade Commission.
At issue is credit card "interchange," a non-negotiable fee averaging close to 2 percent that Visa and MasterCard banks charge merchants every time a credit card or signature debit card is used to pay for a transaction. Visa and MasterCard effectively force merchants to pass the fees on to consumers by requiring them to be included in the advertised price of items and making cash discounts difficult. But interchange is largely unknown to most consumers because Visa and MasterCard keep merchants from disclosing it on receipts and don't disclose the fee on monthly statements.
Unlike other vendors who provide services to retailers, Visa and MasterCard refuse to negotiate over the fees regardless of the size of the merchant. NRF has argued that interchange practices violate antitrust law because banks issuing the cards agree to charge the same rates.
According to NRF estimates, the average U.S. family will pay $427 in hidden credit card interchange fees in 2008, up from $378 in 2007.
The amount has nearly tripled from the $159 paid in 2001, the year NRF began tracking interchange.
Total interchange collections are projected at $48 billion this year, up from $42 billion last year and $16.6 billion in 2001.
The National Retail Federation is the world's largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet, independent stores, chain restaurants, drug stores and grocery stores as well as the industry's key trading partners of retail goods and services. NRF represents an industry with more than 1.6 million U.S. retail companies, more than 25 million employees - about one in five American workers - and 2007 sales of $4.5 trillion. As the industry umbrella group, NRF also represents over 100 state, national and international retail associations. www.nrf.com
SOURCE: National Retail Federation National Retail Federation
J. Craig Shearman, 202-626-8134
shearmanc@nrf.com
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