Technology/Services

A Piece of the Puzzle

Merchants Payments Coalition responds to Visa's release of interchange rates

WASHINGTON -- Mallory Duncan, chairman of the Merchants Payments Coalition (MPC) and senior vice president and general counsel at the National Retail Federation, issued a statement yesterday in response to Visa's announcement that it would post interchange rates on its website.

"This announcement by Visa begins to shed a much-needed spotlight on the excessive interchange rates merchants and consumers are forced to pay on virtually every credit or debit card transaction. It is evident that Visa has felt the pressure of congressional scrutiny and merchant [image-nocss] outrage over these anti-competitive practices, since as recently as September they maintained that these fees were already available."

The statement continued, "The release of these interchange rates brings to light the need for further transparency. The report shows a bewildering array of rates for different cards, merchants and types of transactions, which emphasizes the opacity of interchange. Without the operating rules that govern how these fees are applied, this announcement falls far short of the disclosure that is required and that Visa promised in testimony before Congress this summer. Given the recent GAO report on Visa and MasterCard's failure to clearly disclose fees and terms to consumers, their lack of transparency in dealing with merchants should come as no surprise.

It concluded, "Our position is clear. The collective setting of interchange fees by Visa and MasterCard violates the antitrust laws and costs merchants and consumers $30 billion a year. Visa and MasterCard need to fulfill the promises they made in testimony to the Senate Judiciary Committee to provide their full operating rules. Only when the full picture of the interchange puzzle is complete can Congress decide what further action may be required."

Duncan also noted that Visa's announcement inaccurately stated that merchants "do not pay interchange," but pay a merchant discount fee instead. Interchange is a non-negotiable fee paid as part of the merchant discount fee, accounting for approximately 80% of the total merchant discount fee, he said.

MPC is a group of about 20 trade associations representing retailers, restaurants, supermarkets, drug stores, convenience stores, gas stations, online merchants and other businesses that accept debit and credit cards. MPC 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 with approximately 50 million employees.

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