WASHINGTON -- The Merchants Payments Coalition (MPC) said Wednesday that it welcomed comments from Senator Norm Coleman (R-Minn.) criticizing the hidden interchange fees that Visa and MasterCard charge merchants whenever a customer makes a purchase using a credit or debit card.
Coleman made his comments at a hearing of the Senate Homeland Security & Government Affairs Committee's Permanent Subcommittee on Investigations looking into a variety of confusing and abusive credit card practices. In his opening statement, Coleman, the subcommittee's senior [image-nocss] Republican, said that interchange fees can significantly impact the prices charged by merchants and retailers.
Subcommittee Chairman Sen. Carl Levin (D-Mich.) is threatening legislative action to force credit card companies to be more open about their interest rates, marketing practices and fees.
We are very pleased that the Senate is shining a bright light on one of most abusive credit card practices of all, said Mallory Duncan, senior vice president and general counsel at the National Retail Federation and chairman of the MPC. Interchange is the biggest fee you've never heard of, costing American consumers more than $30 billion a year. But unlike other credit card fees, interchange never shows up on your monthly statement. Credit card companies make it virtually impossible for merchants to tell you how much you are paying in interchange fees, even though these fees increase the price of everything thing you buy.
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% for most credit card and signature debit transactions. Visa and MasterCard interchange fees totaled $30.7 billion in 2005, up 17% from 2004 and 85% since 2001. The average U.S. family pays more than $300 every year in hidden interchange fees, according to MPC.
At a hearing of the Senate Banking Committee in January, Chairman Chris Dodd (D-Conn.) also promised to examine the consumer impact of hidden interchange fees, along with other abusive practices of the big credit card companies.
MPC, a group of nearly 30 associations representing retailers, supermarkets, drug stores, convenience stores, fuel stations, online 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 with approximately 50 million employees.
In an effort to reform the fees, practices and policies of the credit card companies, MPC has established www.unfaircreditcardfees.com to provide consumers, merchants and retailers with information about interchange fees and how to become involved in the effort.
Click here to read a transcript of Coleman's opening statement.
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