MasterCard Comments on GAO Credit and Debit Card Report

The GAO report concludes that the federal government realizes benefits from card usage including the ability to make purchases more quickly and with lower administrative costs than with its previous purchasing methods. For example, report notes that the General Services Administration estimates a total administrative cost savings of $1.7 billion in fiscal year 2006 alone due to the use of payment cards. The report also points out that through the GSA SmartPay(R) program, the government received rebates on purchases of approximately $175 million in 2007, and that using cards provides government agencies with enhanced data on purchasing trends, which can be used to negotiate better prices from vendors.

Moreover, the GAO says that where the government accepts cards in its role as a merchant, it benefits by creating more satisfied customers, reducing bad checks and cash thefts, and improving operational efficiencies. Consumers use their credit and debit cards to make payments to federal, state, and local governments for such things as income taxes, park admissions fees, drivers and other licenses, or paying parking fines.

In addition to concluding that the federal government has derived enormous benefit from card usage and acceptance, the GAO report refutes some merchants' assertion that interchange regulation in foreign countries has been pro-consumer by confirming that "no conclusive evidence exists that lower interchange fees led merchants to reduce retail prices for goods; further, some costs for card users, such as annual and other fees, have increased."

MasterCard also noted that interchange regulation would mean small financial institutions, including community banks and credit unions, would find it harder to provide payment card services to their customers and members. Ultimately, we believe that fewer payment cards issued would mean lower sales for merchants.

Members of Congress who have introduced legislation to impose price controls on merchant discount fees in the U.S., should note the GAO's conclusion concerning the negative consumer impact similar regulation has had on consumers in Australia.