NRF Testifies that Credit Card Companies are in an ‘Arms Race’ to Increase ‘Swipe Fees’ Paid by Merchants and Consumers (NRF via BW)

October 8, 2009

WASHINGTON–(BUSINESS WIRE)–The National Retail Federation today warned Congress that credit card companies are in an “arms race” to increase the $48 billion in “swipe” fees paid by merchants and their customers each year, and urged passage of legislation that would put rules governing the fees under the jurisdiction of the Federal Trade Commission.

“There is an arms race to create cards with higher fees and more bells and whistles,” NRF Senior Vice President and General Counsel Mallory Duncan said. “The market checks that would normally exist to curb this escalation in fees are diminished because the card companies know that every merchant is required to take these expensive new cards or lose their ability to accept any cards. The Welch-Shuster bill would allow the most expensive cards to be refused, and while we expect that few merchants would actually refuse cards if this were passed, it would make the card companies think before they reflexively introduce cards with higher fees.”

“Most consumers don’t know it, but every time they swipe a rewards card with its miles and concierge services, they are driving up the price of everything they buy even higher,” Duncan said. “This particularly hurts less-privileged Americans who don’t have rewards cards or can’t get cards at all because Visa and MasterCard rules effectively require that everyone pay the credit card price even if they are paying with cash, check, debit card or even food stamps.”

“There is no regulator that reviews whether credit card company rules are unfair, deceptive or anticompetitive,” Duncan said. “This legislation would deal with this absence of oversight by directing the Federal Trade Commission to review card company rules and prohibit practices that meet that description. That is the minimum level of protection that this market needs to begin to function properly.”

Duncan testified before the House Financial Services Committee today during a hearing on H.R. 2382, the Credit Card Interchange Act of 2009, sponsored by Representative Peter Welch, D-Vt., and co-sponsored by Representative Bill Shuster, R-Pa. The bill would require credit card companies to disclose interchange rates, terms and conditions, and give the Federal Trade Commission authority to review interchange and prohibit any practices that violate consumer protection or anti-competition laws. Merchants would be allowed to give cash discounts and set minimum credit card purchase amounts, and could choose which credit cards to accept.

Interchange is a fee averaging 2 percent that Visa and MasterCard banks charge merchants each time one of their credit cards is swiped to pay for a purchase. But Duncan explained to the committee that the rate can range from as low as about 1.5 percent for an ordinary card to 3 percent or more for “gold” and “platinum” cards that offer rewards like travel miles or concierge services. In recent years, card companies have created an escalating series of rewards cards – each carrying more rewards but also higher fees – and “upgraded” millions of consumers. The higher-fee cards can’t be turned down by merchants because of Visa and MasterCard’s “Honor All Cards” rule. The practice, along with marketing that has pushed the use of plastic and introduced cards into new areas like taxis, has helped triple interchange revenue from the $16 billion collected when NRF began tracking the fees in 2001 to the $48 billion collected last year.

Visa and MasterCard rules effectively force merchants to pass the fees on to consumers by requiring them to be included in the advertised price of merchandise and making cash discounts difficult. The result is that the average household paid an estimated $427 in higher prices last year, up from $159 in 2001.

Merchants have long sought to offer cash discounts, but Duncan said an amendment to this spring’s credit card reform bill that would have blocked credit card companies from interfering with that ability was met with “howls of protest’ from the card industry and was not included in the final measure.

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 establishments, more than 24 million employees – about one in five American workers – and 2008 sales of $4.6 trillion. As the industry umbrella group, NRF also represents more than 100 state, national and international retail associations.

“NACS’ CEO Details Progress in Interchange Fee Fight” (via NACS)

October 6, 2008

CHICAGO — Calling outrageous credit card fees the most important battle faced by the industry, NACS President and CEO Hank Armour said the industry continues to put pressure on the issue, “2009 looks to be the watershed year in which we may finally get significant relief,” he said during the Opening General Session at the NACS Show 2008 on Oct. 5, 2008.

“This is the biggest issue that our industry has faced in decades, and we’ve taken it head on,” said Armour. “With the tremendous help and support of many of you, we made a lot of progress this year.” The Credit Card Fair Fee Act was successfully passed out of the House Judiciary Committee (H.R. 5546), and the legislation was also introduced in the Senate (S. 3086), he noted.

“We obviously have the credit card companies’ attention,” said Armour, referencing what he described as public relations stunts that Visa and MasterCard attempted this summer to deflect attention away from the issue of interchange. “While Visa and MasterCard claim they have fixed the problem, they haven’t. The only thing they fix — and they continue to do so — is the price,” said Armour to applause.

[Source: NACS – CS News, click here to read more]

Congressman Welch Supports Credit Card Reform; Encourages Congress to Act on Credit Card Interchange Fees that Hurt Both Merchants and Consumers

September 21, 2008

Washington, D.C. – September 23, 2008 – Today, the House of Representatives passed the Credit Cardholders’ Bill of Rights Act, legislation to rein in unfair and deceptive credit card company practices. Congressman Peter Welch (D-VT) made the following floor statement in support of credit card company reforms and urged subsequent legislative action on credit card interchange fees, one anticompetitive card company practice not being specifically addressed today:

“This bill is the beginning of important reforms in credit cards – the beginning of increased protection for consumers of credit card companies. The other side of the coin, which we’re not taking up today but will hopefully get to, is for merchants who pay fees to credit card companies for every single credit card transaction – the so-called interchange fees.

Mr. Speaker, in the United States, our credit card interchange fees are the highest, the highest, in the entire world accounting for as much as 2% of the cost of every credit card transaction, in some cases a good deal more. These bloated interchange fees are passed on to the consumer. The average American family in fact pays an extra $300 a year in items they purchase as a result of credit cards.

I have introduced legislation, H.R. 6248, the Credit Card Interchange Fees Act, which would require credit card companies to disclose their interchange rates, terms, and conditions to consumers, businesses, and the public. In addition, the bill would empower the Federal Trade Commission to review these rates and rules and prohibit any practices that violate consumer-protection or anti-competitive laws. Chairman John Conyers also has important legislation – the Credit Card Fair Fee Act – that has been passed out of the Judiciary Committee and would give merchants a seat at the negotiating table to determine the fees assessed for every sale made by credit card.

In the next Congress, I look forward to continuing to work with my colleagues on the Financial Services Committee and the Judiciary Committee to pass legislation into law that protects both the consumer and the merchant from credit card companies.”

Congressman Peter Welch is the sponsor of HR 6248, the Credit Card Interchange Fees Act of 2008, and is also an original co-sponsor of HR 5546, the Credit Card Fair Fee Act. The Merchants Payments Coalition applauds Congressman Welch for his leadership on this important merchant and consumer issue and looks forward to prompt Congressional consideration of credit card interchange fees. is run by the Merchants Payments Coalition (MPC), a group of retailers, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses who are fighting against unfair credit card fees and 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 with approximately 50 million employees. For further information, please visit

How to Support The Credit Card Fair Fee Act

September 18, 2008

Click here and tell your elected representatives to support HR 5546/S 3086, The Credit Card Fair Fee Act.

“Every 6 months, Visa/Mastercard raise their rates by 4-8 basis points”: Nova

September 12, 2008

I just received a call from a Nova sales rep with an interesting pitch. He explained that every six months, Visa and MasterCard raise their rates.  In Nova’s own words is the email followup I just received.


Thank you for your time on the phone today!  As you know, I am a representative of Nova, one of the largest credit card processors in the industry.  In addition to a very competitive rate, some of the other benefits of doing business with us are as follows:

Local Customer Support

  • Next Day Funding
  • FREE Supplies
  • No Term Commitment
  • Can Work with Existing Equipment
  • Seamless Transition
  • 1 Year Rate Guarantee
  • Paid Cancellation / Software Fees (based on volume)

As we discussed, there was just a rate increase that occurred in April and there is another one coming up in October. Every 6 months, Visa/Mastercard raise their rates by 4-8 basis points.  Many businesses take the time during these periods to reevaluate their situation. I would like the opportunity to prepare a formal credit card comparison for  If you are able to fax a current statement to my attention, I am confident that I can secure you a competitive rate.  Once received, it would only take me a day or so to get back to you.  If you have any questions/concerns, please feel free to contact me.  Thanks again Mitch and have a great weekend!

Kind Regards,

Jeff ……
Account Executive

Fact Sheet: Do You Know How Interchange Fees Harm Service Stations and all Merchants?

July 3, 2008

Visa and MasterCard credit card fees inflate the price of gas by charging consumers and merchants hidden credit card fees that total 8-10 cents a gallon that inflate already skyrocketing gasoline prices. Credit card fees now tally up to $2.00 or more per fill up for many drivers.


Service stations owners and consumers are paying record credit card fees

as Visa, MasterCard, and their member banks reap the windfall from the 100% increase in the price of gasoline since 2007.About two dollars of every $100 the consumer spends in stores or buying gasoline goes directly to the credit card industry in the form of the interchange fee, the biggest credit card fee you’’ve never heard of. Americans pay three times as much in interchange fees as Europeans.

Interchange started as a fee to pay for credit card processing more than 50 years ago when everything was done by hand. Now computers do all the work, but the fees have skyrocketed in recent years.

American businesses and consumers paid $42 billion in interchange fees in 2007 alone.

The price of gas is the BIGGEST issue in the country, bigger than the ““economy”” according to one survey (Yahoo). Two-thirds consider gas prices an extremely important issue, edging the economy and outpacing health care and Iraq as the country’s most distressing problem. In November, when gas cost about $1 a gallon less than today, just under half rated it extremely 



With $4-plus gasoline, the credit card industry typically takes in 8-10 cents per gallon in interchange fees, far more than the service station owner if he or she is making any money at all. (Many service station owners are currently losing money on every gallon they sell.)


Except for OPEC, nobody makes more money from skyrocketing gasoline prices than Visa & MC.

  Interchange fees are set in secret by the credit card industry. The Credit Card Fair Fee Act (HR 5546,S 3086) is a solution that would create a competitive market outcome and bring transparency to the broken credit card market by allowing merchants a seat at the negotiating table.

Visa’s announcement on June 26th that it will restructure some interchange fees on gas purchases is their first public acknowledgment that the 100% increase in gasoline prices combined with the 100% windfall they have enjoyed from higher credit card revenues in the last year is a major problem for American consumers. However, Visa’s latest actions will make things worse for most people by raising –– not lowering –– credit card interchange fees on the average gasoline transaction. It will mean higher credit card fees for the average gas station. And Visa’s actions do not address the issue of skyrocketing food costs as well as gasoline.

Interchange fees hit consumers coming and going. For example, when truckers fill their tanks to get the goods we buy to market, the interchange fees charged can be as much as $20-25 for a single fill-up. Trucking costs, in turn, increase the costs of all the goods those trucks deliver. So, not only do the credit card companies increase costs on a gallon of milk when a consumer buys it with a credit card at the grocery store, credit card interchange also pumps up the price of that gallon of milk through the trucker’s fuel costs. This ripple effect hurts consumers and businesses in ways they do not realize — and never see coming.

It’’s time to……
-Wake up Congress to stop hidden credit card

   fees on gas

-Put the brake on hidden credit card fees on gas

-Fight the fees that fuel rising gasoline prices

-Take action that stops gas stations from closing

   because of unfair credit card fees