NACS Responds To GAO Study on Credit Card Fees

The National Association of Convenience Stores (NACS) responded to the release of the U.S. Government Accountability Office (GAO) report, “Credit Cards: Rising Interchange Fees Have Increased Costs for Merchants but Options for Reducing Fees Pose Challenges.”

 

“The GAO confirmed key problems that we have raised about credit card interchange fees, also known as ‘swipe’ fees,” said Lyle Beckwith, NACS senior vice president of government relations. “They found that the 10 largest banks have a stranglehold on this market, have used it to raise their fees, which all consumers pay, and that small businesses and low-income, cash-paying consumers get the worst deal from this arrangement.”

 

“And though Visa and MasterCard claim that swipe fees have not been increasing, and that credit card use increases sales for merchants, the GAO report solidly debunks both of those claims,” Beckwith said. “The GAO report should sound the alarm that it is time for Congress to reform swipe fees.”

 

NACS noted that the GAO report confirmed many of the most harmful aspects of hidden swipe fees that are incurred every time a consumer pays by debit or credit card. The report shows that the credit card companies and their issuing banks mislead the public about their increasing rates and about the benefits of credit cards to businesses. The report also outlines an unfair, anti-competitive system that hurts Main Street businesses and their customers in order to pad the banks’ bottom lines, with little relation to the actual costs of processing payments.

 

“The report makes it clear that, unless Congress acts to bring competition and transparency into the interchange system, the big banks and credit card companies will keep lining their pockets at the expense of small businesses and consumers nationwide,” NACS reported.

 

The study found that despite claims by Visa and MasterCard that they aren’t raising swipe fee rates, swipe fee rates have actually been increasing dramatically. The near-monopoly market power of Visa and MasterCard means competition is unlikely to hold down swipe fee costs. Artificially high swipe fees increase costs for consumers and hurt those consumers without credit cards the most. Despite claims by Visa and MasterCard that their products increase sales, even their own data doesn’t support that claim, and costs to merchants are outpacing any sales increases. Swipe fees are a cash cow for the credit card companies and banks, not a reflection of their processing costs.

 

NACS is a founding member of the Merchants Payments Coalition, a group of retailers, who are fighting against unfair credit card fees and 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.

 

 

SOURCE National Association of Convenience Stores 

 

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