Pa. Senator Speaks Out on Interchange Fees

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Pa. Senator Speaks Out on Interchange Fees

CAMP HILL, Pa. -- U.S. Senator Arlen Specter (R-Pa.) visited the Giant Food Store here earlier this week, discussing the issue of interchange fees with both Giant executives and its customers, and later, called for change within the credit card industry.

Specter, who is also a ranking member of the Senate Judiciary Committee, is considering legislation to change the practice of charging retailers interchange fees based on purchase amounts, the Patriot-News reported.

"We may need to modify our antitrust laws to stop credit card companies from engaging in collusive or conspiratorial activities to gouge or jack up the prices," Specter told the paper after a news conference yesterday.

The fees have been the subject of several lawsuits and have positioned retailers against credit card companies. Representatives from both companies have testified before Specter's committee, stating the fees merchants pay are justified.

Last year, Specter held a hearing on interchange fees and found what he described as a "disturbing pattern of anticompetitive conduct by credit card companies," according to a statement by the Merchants Payments Coalition.

MasterCard would support a review of antitrust laws, according to Joshua Peirez, group executive for global public policy for MasterCard Worldwide.

"We believe our current practices are entirely legal and defensible," he told the paper. "And courts have found that on this exact issue. We believe that not only is the way we set interchange fees legal, it is pro-competitive, benefits consumers, merchants and the economy as a whole."

Interchange fees are a balancing act, explained Rhonda Bentz, spokeswoman for Visa. The fees have to be high enough to give the card issuers incentive to continue. Meanwhile, the fees must be low enough so that retailers will accept cards, she said.

Since 2004, Carlisle-based Giant has seen the cost of credit transactions increase, CEO Carl Schlicker told the Patriot-News. "The problem from our perspective, these are things we have no control over," he said. "Whenever they elect to raise their fees, we have no choice but to pay them."

While credit- and debit-card transactions make up about 25 percent of Giant's sales, the supermarket chain does not pass on the cost of the fees associated with the transactions to the consumer, he said.