Congressional Committee talks tough on interchange fees

Congressional Committee talks tough on interchange fees

The Merchants Payments Coalition (MPS), a group of around 20 American merchant trade associations, has welcomed moves by the US Congress to examine the non-negotiable interchange fees charged on card transactions by credit card companies.

Earlier this week members of the Senate Banking Committee, led by chairman Christopher Dodd, launched the first of a series of hearings about the credit card industry in the US.

The panel will look at billing, marketing and disclosure practices including the role that cards have played in the rise in consumer debt, interest rates charges and the interchage fees imposed on merchants.

In a statement Dodd says interchange fees are growing exponentially and the costs associated with the charges are expected to be between $30 and $40 billion this year alone.

"These opaque fees, assessed on merchants, are passed on, in part or whole, to consumers who have no knowledge or understanding that a fee is even a part of the cost of bread or milk, or any other consumer product. I believe that this is another area that this Committee should examine," he adds.

MPS committee chairwoman Jennifer Hatcher welcomed the move, saying credit card companies have long profited from placing hidden fees and practices on unsuspecting merchants and consumers.

"The interchange fee is the biggest fee consumers have never heard of and accounts for more than the total of all other consumer fees such as late fees and over-the-limit fees," says Hatcher. "Last year, Visa and MasterCard generated more than $30 billion in credit and debit card interchange fees - a fee set in secret by Visa and MasterCard and imposed on merchants and consumers by the credit card industry and completely hidden from consumers."

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