Merchant Payments Coalition rails at Visa interchange charges in post-EMV landscape

Source: Merchant Payments Coalition

Visa this week refused to consider lowering interchange fees even if fraud is reduced after merchants invest billions in new security technologies.

The company refused to commit to lowering the $50 billion in interchange fees American merchants pay every year to the banks and card brands when asked during a hearing in the House Small Business Committee this week.

The Merchants Payments Coalition, an advocacy group, and members of the committee saw through Visa’s statement. Ranking member Nydia Velázquez (D-NY) noted in her question that historically, Visa has defended its high interchange fees as covering the cost of fraud, so logically if fraud goes down so should the fees.

Visa’s contradictory statement makes it clear; it is committed to ensuring record profits for itself and the banks on the backs of the American consumer and merchants, regardless of the fraud rate.

Even more extraordinary, the Visa witness went on to claim that the card company sets its prices “competitively” to attract both issuing bank and merchant acceptance. In fact, the broken credit card market does compete for banks to issue their cards by promising additional profits with high interchange fees.

Conversely, Visa and the other brands have used the “take it or leave it” approach for merchants leaving them with no negotiating power on interchange rates.

When a Visa executive told committee members that Visa’s fees are “very competitive,” Rep. Velázquez said: “I can’t help but laugh.”

Unfortunately merchants and their customers are not laughing. High interchange fees drive up the cost of goods and services to all consumers, not just those paying with credit cards.

It is time for some real competition in the broken credit card market that will once and for all drive down these unfair fees.
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