Merchants Payments Coalition Focuses on Interchange Fees

Did you ever wonder who pays for all the credit card junk mail that's been burying you lately? According to new advertisements appearing this week, all Americans do, thanks to credit card fees that you have probably never even heard of.

The advertisements, placed by the Merchants Payments Coalition, a group of merchant trade associations seeking a more competitive and transparent credit card fee system, show how the big credit card companies use some of the billions they collect from the credit card "interchange" fee to pay for marketing campaigns, including a mountain of more than nine billion unsolicited credit card offers that bury our mailboxes every year.

The ads depict a consumer buried in envelopes full of credit card junk mail, and carry the text: "Ever wonder who pays for all that credit card junk mail? You do. It comes from your credit card interchange fees. Interchange is the biggest credit card fee you've never heard of -- and it's dangerous."

The ads began running in Washington newspapers today in anticipation of a hearing on interchange fees scheduled to be held Thursday by the House Judiciary Committee's Antitrust Task Force.

The credit card interchange fee is a percentage of each transaction that Visa and MasterCard banks collect from retailers every time a credit or debit card is used to pay for a purchase. The fee varies with type of card, size of merchant, and other factors, but averages close to two percent, or about $2 for a $100 purchase. Visa and MasterCard banks collected more than $36 billion in interchange fees last year, up 17 percent from 2005 and 117 percent since 2001.

According to a recent study, the credit card companies and their banks spend only about 13 percent of the interchange fee on actual processing. The rest goes for marketing, profit and other things like rewards programs.

Unlike other credit card fees that show up on monthly statements, the credit card interchange fee is hidden, and Visa/MasterCard rules make it practically impossible for merchants to tell customers how much they are really paying. Instead, merchants are effectively left to include the fee in the price of merchandise.

The MPC, a group of nearly 30 associations representing retailers, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses that accept debit and credit cards are fighting for a more competitive and transparent card system that works better for consumers and merchants alike. The coalition's member associations collectively represent about 2.7 million stores with approximately 50 million employees.

The full ad is available at http://www.unfaircreditcardfees.com