Credit Card Interchange Fees
In recent years, merchants have become displeased with what
they see as rising credit card processing fees (commonly referred to as credit
card interchange fees). In turn, merchants
have leaned on industry lobbyists, acquirers, and credit card companies in an
effort to find relief. The
result of this pressure is three separate proposed Congressional bills, most
notable among them the Credit Card
Interchange Fees Act of 2009.
Though there is still no word on whether these proposed bills will proceed
through Congress, that hasn’t kept merchants, processors, credit card issuers,
and even some consumers from debating
their merit.
The release last month of a
report on credit card interchange fees from the General Accountability Office
has only added to the confusion, essentially reporting that regulating and/or
limiting interchange fees would result in a sequence of nearly indeterminable
feedbacks, with no clear definition of who might be the beneficiary.
While the complaints of merchants over credit card interchange fees have been
the primary driver of action on this matter, an important secondary
consideration is at play as well. Consumers,
for whom the recent C.A.R.D. act
was passed in Congress, are assumed to be paying higher prices for goods and
services as a result of merchants raising prices to absorb what they view to be
increasing interchange fees.
Essentially, then, the three proposed bills are aimed at protecting merchants
and consumers, with the assumption being that merchants would lower prices for
goods and services if interchange fees were lowered or eliminated.
At the heart of this growing debate, for some, is whether a lowering of
interchange fees would actually result in lower prices. Would merchants lower prices or simply
grow margins?
What do you think will happen? Let us know in the comments below.
