Senate Hearing on Credit Card Fees Set for Today
WASHINGTON, D.C. -- Former NACS Chairman Bill Douglass, CEO of Douglass Distributing in Sherman, Texas, is one of the retailers who will testify during a U.S. Senate Judiciary Committee hearing on antitrust concerns of credit card interchange fees scheduled for today. The hearing was originally slated for late June.
Douglass will be joined by representatives of the Merchants Payment Coalition and Kathy Miller, owner of The Elmore Store in Elmore, Vt., who is testifying on behalf of the Vermont Grocers Association about the "devastating cost" of these fees to smaller retailers, The Food Marketing Institute's director of editorial services Bill Greer told Progressive Grocer, a sister publication of Convenience Store News.
General counsel from Visa and MasterCard will also testify at the meeting.
Interchange fees are a percentage of each transaction -- sometimes accompanied by a flat fee -- which Visa and MasterCard banks collect from retailers every time credit or debit cards are used to pay for a purchase. The fee averages close to 2 percent. NACS estimated that as a whole, the industry paid $5.25 billion in credit card costs last year -- up from $3.80 billion in 2004 -- while industry profits totaled $5.8 billion in 2005.
The Merchants Payment Coalition, of which FMI is a leading member, has launched a Web site about the issue at www.unfaircreditcardfees.com.
The coalition is composed of 20 trade associations representing retailers, restaurants, supermarkets, drugstores, convenience stores, gas stations, on-line merchants and other businesses that accept debit and credit cards. It is fighting for a more competitive and transparent card system. The coalition's member associations collectively represent about 2.7 million stores with approximately 50 million employees.
Today's hearing comes five months after NACS President and CEO Henry Armour testified before the House Energy and Commerce Committee's Subcommittee on Commerce, Trade and Consumer Protection on the industry’s struggle with interchange fees.
During his testimony, Armour outlined four fundamental problems with the current interchange market. First, he noted that due to the market power of the card associations, retailers have no choice about whether they accept cards. Second, the card associations exploit their market power by driving up fees and by veiling these fees and their rules in secrecy. Third, these fees are bad for consumers -- particularly some middle -- and many lower-income consumers who do not have easy access to credit and debit cards. And fourth, he said U.S. consumers pay much more for interchange than other countries.
Douglass will be joined by representatives of the Merchants Payment Coalition and Kathy Miller, owner of The Elmore Store in Elmore, Vt., who is testifying on behalf of the Vermont Grocers Association about the "devastating cost" of these fees to smaller retailers, The Food Marketing Institute's director of editorial services Bill Greer told Progressive Grocer, a sister publication of Convenience Store News.
General counsel from Visa and MasterCard will also testify at the meeting.
Interchange fees are a percentage of each transaction -- sometimes accompanied by a flat fee -- which Visa and MasterCard banks collect from retailers every time credit or debit cards are used to pay for a purchase. The fee averages close to 2 percent. NACS estimated that as a whole, the industry paid $5.25 billion in credit card costs last year -- up from $3.80 billion in 2004 -- while industry profits totaled $5.8 billion in 2005.
The Merchants Payment Coalition, of which FMI is a leading member, has launched a Web site about the issue at www.unfaircreditcardfees.com.
The coalition is composed of 20 trade associations representing retailers, restaurants, supermarkets, drugstores, convenience stores, gas stations, on-line merchants and other businesses that accept debit and credit cards. It is fighting for a more competitive and transparent card system. The coalition's member associations collectively represent about 2.7 million stores with approximately 50 million employees.
Today's hearing comes five months after NACS President and CEO Henry Armour testified before the House Energy and Commerce Committee's Subcommittee on Commerce, Trade and Consumer Protection on the industry’s struggle with interchange fees.
During his testimony, Armour outlined four fundamental problems with the current interchange market. First, he noted that due to the market power of the card associations, retailers have no choice about whether they accept cards. Second, the card associations exploit their market power by driving up fees and by veiling these fees and their rules in secrecy. Third, these fees are bad for consumers -- particularly some middle -- and many lower-income consumers who do not have easy access to credit and debit cards. And fourth, he said U.S. consumers pay much more for interchange than other countries.