NRF Turns to States for Interchange Help
WASHINGTON -- The National Retail Federation (NRF) is upping the ante against credit card companies by urging states to get involved in the fight against interchange fees, reported Digital Transaction News. The trade group has been lobbying the federal government for relief from soaring credit card fees for the past several years.
Nine states have introduced at least 15 bills concerning interchange fees this year, according to the NRF.
"The activities you are doing in the states to shine a light on these fees and make consumers aware of them is an important step in the right direction," NRF General Counsel Mallory Duncan said at the National Conference of State Legislatures' Spring Conference last week in Washington, D.C.
Duncan focused on sales taxes and interchange. He said interchange is calculated after sales tax has been applied to purchases, and as a result, larger fees are assessed then if applied solely to merchandise. Because retailers are required to give the entire sales tax amount to state treasuries, merchandise must be priced at levels to offset the interchange charged on the sales tax, he explained.
"When Visa and MasterCard take their cut, they don't take it on just the retail sale, they take it on the entire transaction including the sales tax," he said. "That's not their money. The sales tax is the people's money, and they shouldn't be trying to take a piece of it. That drives up prices even higher, and everybody ends up paying a tax on a tax."
Measures to ban fees assessed on sales tax were introduced so far this year in Florida, Kansas, Nevada, New York and Washington, according to NRF. Meanwhile, Kentucky, Nebraska and Texas introduced bills requiring credit card companies to be more transparent in disclosing rules and fees, the report stated. In addition, a bill in Tennessee would cap interchange at 0.75 percent.
However, a number of the bills have already died, said a spokesperson for MasterCard Worldwide. Only bills in New York, Tennessee and Texas are still viable, according to MasterCard.
Duncan remains confident. "That's not important; typically bills don't pass the first time they're introduced," he told Digital Transactions News. "Right now, the retail industry and their customers are under the thumb of monopolists." He added, on the states' bills: "What states do sometimes affects the federal government."
While the Democratic Congress has not introduced an interchange bill to date, the Senate Judiciary Committee last year held a hearing on whether interchange practices violate federal antitrust law, the report stated. In addition, the Senate Banking, Housing and Urban Affairs Committee plans to hold a hearing on interchange this year and the Senate Homeland Security and Government Affairs Committee may include interchange in its investigation of abusive credit card industry practices and fees, according to the NRF.
Nine states have introduced at least 15 bills concerning interchange fees this year, according to the NRF.
"The activities you are doing in the states to shine a light on these fees and make consumers aware of them is an important step in the right direction," NRF General Counsel Mallory Duncan said at the National Conference of State Legislatures' Spring Conference last week in Washington, D.C.
Duncan focused on sales taxes and interchange. He said interchange is calculated after sales tax has been applied to purchases, and as a result, larger fees are assessed then if applied solely to merchandise. Because retailers are required to give the entire sales tax amount to state treasuries, merchandise must be priced at levels to offset the interchange charged on the sales tax, he explained.
"When Visa and MasterCard take their cut, they don't take it on just the retail sale, they take it on the entire transaction including the sales tax," he said. "That's not their money. The sales tax is the people's money, and they shouldn't be trying to take a piece of it. That drives up prices even higher, and everybody ends up paying a tax on a tax."
Measures to ban fees assessed on sales tax were introduced so far this year in Florida, Kansas, Nevada, New York and Washington, according to NRF. Meanwhile, Kentucky, Nebraska and Texas introduced bills requiring credit card companies to be more transparent in disclosing rules and fees, the report stated. In addition, a bill in Tennessee would cap interchange at 0.75 percent.
However, a number of the bills have already died, said a spokesperson for MasterCard Worldwide. Only bills in New York, Tennessee and Texas are still viable, according to MasterCard.
Duncan remains confident. "That's not important; typically bills don't pass the first time they're introduced," he told Digital Transactions News. "Right now, the retail industry and their customers are under the thumb of monopolists." He added, on the states' bills: "What states do sometimes affects the federal government."
While the Democratic Congress has not introduced an interchange bill to date, the Senate Judiciary Committee last year held a hearing on whether interchange practices violate federal antitrust law, the report stated. In addition, the Senate Banking, Housing and Urban Affairs Committee plans to hold a hearing on interchange this year and the Senate Homeland Security and Government Affairs Committee may include interchange in its investigation of abusive credit card industry practices and fees, according to the NRF.