Sep 17, 2009

Retailers Battle Credit Card FeesBy Nancy TrejosWashingtonPost.com

A battle is brewing over the processing fees that banks charge merchants each time a customer uses a credit or debit card.

Congress is considering three bills that would regulate the so-called interchange fees — which generally amount to 1 to 2 percent of a total sale and totaled $48 billion in 2008. Meanwhile, the Government Accountability Office is doing a study of the fees, as required by a law signed by President Obama in May that bans many unfair credit card industry practices.

Merchants across the country and the card industry are waging a fight for public support. The merchants say the fees are excessive and eat into their already small profit margins, forcing them to pass on the cost to consumers. The card issuers say they are providing merchants a much-needed service as more Americans choose to pay for their purchases with plastic. Both sides have created YouTube videos, bought newspaper ads and released studies to prove their points. Large national chains such as 7-Eleven have embarked on petition drives.

The Merchants Payments Coalition will release a study on Thursday of how European countries, Canada and New Zealand handle interchange fees. Merchants in those countries generally pay lower interchange fees. The study found that if American merchants paid the same swipe fees as those in Australia the past four years, the net savings would total $125 billion.

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