Statement of the Electronic Payments Coalition on H.R. 2695 — WASHINGTON, April 28 /PRNewswire/ —

April 28, 2010

[Comment on Twitter (@WayTooHigh) by Mitch Goldstone: “Electronic Payments Coalition (H.R. 2695 didn’t mention anticompetitive price-fixing, 80% market power #SwipeFees


[Via Press release]

The Electronic Payments Coalition thanks the Judiciary Committee for the opportunity to present the facts in a hearing on H.R. 2695 – a bill that holds extraordinary potential for harming small financial institutions, competition in the debit, credit and charge card market, and ultimately the consumers served by this industry.


Small financial institutions will typically offer debit and credit card products to their customers at or below margin – as a loyalty building and customer service tool.  Should interchange revenue be forced down, as proposed in this bill, these community banks and credit unions will face an impossible decision of raising rates, eliminating rewards programs, or stopping their card programs altogether.  Customers of credit unions and community banks will have fewer choices with reduced competition in the market.



In Australia, where regulators forced down interchange rates below market value, this is precisely what happened.  Merchants saw hundreds of millions of dollars in increased revenue, with no evidence that consumers saw any savings at the register.  Moreover, consumers saw the return of annual fees on their cards, reduced or eliminated rewards programs, and a less competitive marketplace for debit and credit cards.



Merchants receive guaranteed payment, increased profits, and reduced expenses when they accept cards.  But they do not want to pay for these benefits, and are attempting to shift this business expense onto their customers.  We urge Congress to oppose H.R. 2695, a bill that will reduce competition, harm small financial institutions, consumers, and our economic recovery.


About Electronic Payments Coalition

The Electronic Payments Coalition is dedicated to protecting consumer value, choice, and competition in electronic payments systems. The coalition is a broad-based group of payment card networks, financial services companies, and financial services trade associations whose primary goal is to educate policy-makers, consumers, and the media about the value of electronic payments systems — including economic growth, convenience, speed, reliability, and security — and to ensure the continued growth of global commerce by promoting consumer choice and the stability of the vast payment networks that connect millions of consumers with millions of retailers each and every day.

SOURCE Electronic Payments Coalition

via Statement of the Electronic Payments Coalition on H.R. 2695 — WASHINGTON, April 28 /PRNewswire/ —.


What Is “Interchange” [video: Electronic Payments Coalition]

September 20, 2009

You just have to watch this how-to video. The key facts about illegal antitrust price-fixing are omitted, as are the reasons why merchant interchange fees in the U.S. are upwards of six-times what other industrialized nations pay. Remember, this video and the organization promoting it is funded by the banks and Visa and MasterCard. 

The problem is that few understand what these fees are; it is a hidden tax on consumers – amounting to upwards of $48 billion in anticompetitive charges each year. As proof, since this video was posted, only about 450 people viewed it, which my guess was largely from those who produced it.

“Credit-Card Fees Targeted by Retailers Who Say Banks Overcharge ” (via Bloomberg)

November 28, 2008

Reposted – Bloomberg, reporter Jonathan D. Salant

Nov. 29 (Bloomberg) — The subprime mortgage crisis is giving department and convenience stores and gas stations a new argument in asking Congress for power to negotiate the fees banks charge them to process credit-card transactions.

Retailers such as Target Corp. say banks make so much money from the fees that they give credit cards to people who can’t pay their debts, just as they provided mortgages to homeowners who can’t afford them.

“It’s another version of subprime lending,” said Mallory Duncan, chairman of the Merchants Payment Coalition representing trade groups for 2.7 million gas stations, drug stores, supermarkets and other retailers. “The system should be fixed before we are in a position of having to bail out more banks.”

Duncan, a registered lobbyist, is senior vice president and general counsel of the National Retail Federation, whose board members include Delray Beach, Florida-based Office Depot Inc., Cincinnati-based Macy’s Inc., and Plano, Texas-based J.C. Penney Co.

The merchants want an antitrust exemption so they can band together to negotiate with banks over the so-called interchange fee, usually between 1 and 2 percent of the purchase price, that a retailer’s bank pays the cardholder’s bank each time a customer swipes a credit card. The retailer’s bank then collects the fee from the merchant. Consumers don’t see the charge, which merchants say is built into their prices.

‘Significant Issue’

“This is a significant issue for us, and a very high cost for us,” said Eric Hausman, a spokesman for Minneapolis-based Target, the second-largest U.S. discount retailer. “We do expect the next Congress” to look into the issue, he said.

Retailers say the fees should be part of the discussion when Congress returns in January and looks at overhauling bank rules. So far, the merchants have pushed their proposal without success. The House Judiciary Committee approved it in July, though it hasn’t reached the full House or Senate.

Banking groups and the credit-card companies say the interchange fees ensure that retailers get paid even if cardholders default. If the fees were onerous, merchants wouldn’t be so eager to take credit cards, they say.

“You have a choice of whether or not you want to accept plastic,” said Jason Kratovil, vice president for congressional affairs for the Independent Community Bankers of America, the Washington-based trade group for smaller banks. “If the pros outweigh the cons, you do it. It makes a real pithy sound bite to make it that these big banks are out there to gouge consumers.”

Representatives at Bentonville, Arkansas-based Wal-Mart Stores Inc. and Kohl’s Corp. in Menomonee Falls, Wisconsin, had no immediate comment. Spokesmen for Macy’s, J.C. Penney’s, Office Depot, Hoffman Estates, and Framingham-Massachusetts-based TJX Cos. didn’t return phone calls yesterday.

Credit-Card Issuers

Among the largest credit-card issuers is New York-based Citigroup Inc., which this week received a U.S. government rescue package, including $20 million in cash. Two more credit-card issuers, Bank of America Corp., based in Charlotte, North Carolina, and New York-based JPMorgan Chase & Co., were among nine financial institutions receiving $125 billion from the Treasury in October.

“I am connecting the dots with the credit-card industry and the mortgage industry,” said Lyle Beckwith, a senior vice president with the Alexandria, Virginia-based National Association of Convenience Stores.

The banks say credit-card fees cover operating costs, protect banks against default and fraud, and allow them to offer cards with no annual fees and rewards. The charges vary from bank to bank and depend in part on whether the card includes cash rewards or other benefits.

Without the ability to recoup costs, smaller banks wouldn’t be able to issue cards and compete with the larger institutions, said Paul Weston, president of TCM Bank NA in Tampa, Florida.

Fewer Accounts

“You’d see a reduction in the number of accounts,” Weston said. “You’d dial back the features on the account. Some banks would reintroduce fees.”

Financial institutions and their trade associations formed the Electronic Payments Coalition to oppose the legislation, arguing that merchants are simply trying to reduce costs.

“Like any business, they want to find ways to lower their cost of doing business,” said Trish Wexler, a spokeswoman for the coalition, whose members include New York-based American Express Co., Citigroup and San Francisco-based Visa Inc. “We believe that going to Congress and asking for consumers and for the financial institutions to pay is the wrong way.”

Beckwith, whose organization’s members include Dallas-based 7-Eleven Inc. and San Ramon, California-based Chevron Corp., said banks got away from the business model of determining how much a house was worth and how much a homeowner could afford.

“The credit-card business is run by the same banks the exact same way,” Beckwith said. “They’re not in the business of making loans based on the ability to repay, they’re sending out cards based on a business model of making money off the interchange fee.”

[source: Bloomberg]

“Small-Business Owners Lobby to Cut Credit Card Fees” (via NY Times)

November 5, 2008

Click here for link to the November 6, 2008 “Small-Business Owners Lobby to Cut Credit Card Fees” New York Times article by JANE BIRNBAUM


Small business owners are lobbying for new legislation in hopes to cut mandatory fees owed to banks each time a consumer uses a credit or debit card, reports The New York Times.

The legislation would urge banks to negotiate fees with merchants. Some business owners are seeking class-action status for litigation claiming antitrust violations by banks and the MasterCard and Visa card networks, says the article.



A merchant card payment has two parts: an interchange fee, which includes an average 1.7 percent of the sale price and a flat per-transaction fee, and a separate fee that goes to the merchant’s bank, explains the article. In 2007, merchants paid $61.56 billion in electronic payment fees, up from $48.58 billion in 2005, according to the Nilson Report, a payment systems industry newsletter. The report estimated that lenders took in 82.5 percent of those dollars.

Mitch Goldstone, owner,Irvine, Calif., who blogs about interchange fees at, decided to challenge the fees in 2005 after learning that fees on reward cards were going up, says the article. Those representing the credit card industry believe merchants ultimately benefit from the fees.




In July, the House Judiciary Committee, with bipartisan support, passed legislation that requires banks and merchants to negotiate interchange fees, says the article. Small banks and credit unions argued that fee reductions would take away needed income.


Ronald Mann, a law professor at Columbia University and a credit specialist, said he expected that there would be “a tremendous push in Congress in 2009 to adopt important credit card reforms” because of the increased sensitivity to banks’ lending practices.”

[source: NYTimes, Thursday, Nov 6]

Bank Funded Coalition Fires Blanks With Baseless Press Release

August 1, 2008

The bank funded association called Electronic Payments Coalition issued the following press release which is largely debunked from many of the prior postings.  It is as silly as Senator McCain’s  commercial attempting to link Senator Obama with Brittney Spears and Paris Hilton. 

Personally, I cannot think of anything more anti-competitive than interchange fees, along with Visa and MasterCard’s business model; leading to a nearly $50 billion annual hidden tax on Americans. 

What was so remarkable about the below news release was the public comments by Visa and MasterCard.  Collectively,  Josh Floum, general counsel for Visa Inc. and MasterCard both boldly described their industry as being “fiercely competitive.”  With a staggering 80% market power and unbridled control over the world’s electronic payment network, the reality is they are fierce, but only to protect their cartel at all costs to benefit their member banks, rather than consumers.  Average shoppers are forced, along with merchants, to pay this nearly $50 billion annual hidden tax that is no longer based on cost, but rather pure greed.  Mr. Floum even said that if the Credit Card Fair Fee Act is passed it will “suppress competition and innovation and result in unintended and harmful consequences for consumers.” 

I have not read this type of scare tactic since the Washington, DC, public relations firm, Creative Response Concepts concocted the “Swift Boat” campaign, so I would not be surprised if that firm are also regular readers of

From the below press release, the card association’s claim that their fees on gasoline are only a penny or so a gallon, then why does ARCO discount as much as they do or Mr. Small gas station immediately cut prices by 10 cents a gallon when they have a cash option? And, why are thousands of independent service station owners being forced to close down, as interchange fees have doubled along with gas prices?

The Electronic Payments Coalition press release is reprinted in its entirety, below.

Consumers Looking for Relief at the Gas Pump, Not More PR Spin From Lobbyists in Washington, DC. NACS Pumptopper Gimmick Misleads Consumers about High Gas Prices
July 31, 2008
WASHINGTON, July 31, 2008 /PRNewswire/ — Today, the Electronic Payments Coalition called on gas retailing members of the National Association of Convenience Stores (NACS) not to display “pumptopper” advertisements that mislead consumers about the cause of high gas prices. The NACS ad gimmick is part of a high-cost lobbying campaign designed to provide a financial windfall to the world’s most profitable companies at a cost to consumers.
“American consumers are looking for relief from skyrocketing gas prices — not gimmicks from a high priced lobbying campaign designed to line the pockets of the largest and most profitable retailers,” said Peter Madigan, executive director of the Electronic Payments Coalition. “This sort of deceptive advertising campaign about the cause of high gas prices does not do consumers any good and insults their intelligence.”
Congress is currently considering legislation that would provide large retailers an antitrust exemption that would legalize collusion in order to artificially lower the prices they pay to accept credit and debit cards. This government intervention to lower retailers’ costs of doing business will ultimately increase the cost of credit for consumers, decrease or eliminate card reward programs, and reduce access to affordable credit for those who need it.
As an alternative, the Electronic Payments Coalition has provided free posters and flyers — available as a download through the EPC website ( — to help them educate their customers on the true costs associated with a gallon of gas, as provided by a credible source — the U.S. Department of Energy.
“It is grossly misleading — and frankly not even believable — to imply that the penny or so per dollar merchants pay to accept credit cards has anything to do with skyrocketing gas prices,” said Madigan. “Credit and debit cards offer significant benefits, both to the gas retailers that accept them, and to the customers that pay with them. It is important that consumers have a clear understanding the full picture here.”
According to the Energy Information Administration, which are official energy statistics from the United States government, the price for a gallon of regular gasoline breaks down accordingly: crude oil (74%), taxes (10%), refining (9%) and distribution and marketing (7%).
About the Electronic Payments Coalition
The Electronic Payments Coalition is dedicated to protecting consumer value, choice and competition in the electronic payments system. The coalition is a broad-based group of payment card networks, financial services companies, and financial services trade associations whose primary goal is to educate policy-makers, consumers and the media about the value of electronic payments systems — including economic growth, convenience, speed, reliability, and security — and to ensure the continued growth of global commerce by promoting consumer choice and the stability of the vast payment networks that connect millions of consumers with millions of retailers each and every day.
SOURCE Electronic Payments Coalition

“Retailers: Card Fees Too High” (via Times Union)

March 22, 2008

Click here to read the March 22 article by Alan Wechsler in the Times Union.  

[Of note is that the bank’s along with Visa and MasterCard’s proxy, Trish Wexler at their Electronic Payments Coalition advocacy group  explained in the article that “Credit card companies say government has no right to get involved.”  This probably was the same argument the robber barons voiced in the 1800s when the railroad owners forced farmers to pay whatever they demanded to transport their goods to market. Interchange fees are just as antiquated and were designed a generation ago to process four-party payments over the Visa and MasterCard network, back when we merchants used manual credit card imprinters and carbon copy receipts.  As for Ms. Wexler, this is why we have the Sherman Antitrust Act, because Washington listened.  The goal of – The Credit Card Interchange Report is to derail the banks’ arrogance.] 


  • “There’s growing retailer resentment over the fees Visa and MasterCard charge for using their cards. More than 40 years after the cards were first introduced, nine states, including New York, along with the federal government, are pushing for laws to control the power credit card companies have over businesses.”
  • “It’s really out of control,” said Mallory Duncan, senior vice president and general counsel at the National Retail Federation, a trade group in Washington, D.C. “The rates keep going up, the terms are horrendous and it’s a cost that retailers and their customers have to bear.”

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“MasterCard Statement on the Credit Card Fair Fee Act of 2008” (via MasterCard press release)

March 8, 2008

[Click here to view MasterCard Worldwide press release.  Reprinted in its entirety].

Purchase, NY, March 06, 2008The electronic payments system benefits merchants and consumers because it is a highly efficient and secure way to increase sales and consumer satisfaction. The system was developed in the highly competitive marketplace of merchants, banks, payment networks and consumers. This legislation is an attempt by merchants and the Merchants Payments Coalition to put in place price controls, which will harm competition and the card products and services offered to consumers.

MasterCard believes there is no need for government intervention, and that it would be inappropriate for the U.S. government to set prices and negotiate the terms of contracts for private commercial entities. Such policy decisions in the past have proven to be unworkable, unpopular and detrimental to the free market economy. There is no evidence that demonstrates that such price controls will result in savings passed along to consumers. To the contrary, we believe such moves negatively impact consumer choice.

We will continue to work with our customers and other industry organizations, like the Electronic Payments Coalition, American Bankers Association, National Association of Federal Credit Unions, Independent Community Bankers of America, and the American Financial Services Association, to help members of Congress enhance their understanding of how interchange brings benefits to millions of consumers and merchants around the world.

For more information on Interchange, go to: