Are Interchange Fees Eating Into Your Bottom Line?
Small businesses have long expressed concern that credit-card companies are pushing the cost of card incentives and reward programs onto businesses and consumers through interchange fees, which are used to reimburse credit card firms for processing card transactions.
A group of senators on the Small Business and Entrepreneurship Committee asked the Government Accountability Office to investigate whether these fees are properly disclosed, how the fees are set and for more information on the level of competition in the marketplace.
"While the credit card companies assert that they are helping consumers purchase goods and services, merchants, many of which are small businesses, say the interchange fees charged are too high, not set competitively, and eat into already slim profit margins," said Sen. Olympia Snowe (R-Maine), the top Republican on the panel and one of the authors of the letter.
"To get to the bottom of this dispute, we're asking GAO to look at the facts and assess whether credit card interchange fees are set in a transparent manner in accordance with market principles," she said. "I look forward to reviewing GAO's recommendations to determine whether legislation is necessary to address this issue."
Sen. Tom Harkin (D-Iowa) said the fees are blamed for higher grocery prices while Sen. Benjamin Cardin (D-Md.) said it's necessary to get a balanced review to "determine if merchants have appropriate bargaining power to negotiate fair and reasonable rates with companies like MasterCard and Visa who control the majority of the market."
The lawmakers asked the GAO to provide recommendations on how small merchants can negotiate better fees. They also want to know to what extent interchange fees are required to be disclosed to consumers and merchants, what options small merchants have to reduce the cost associated with payment card acceptance and gauge the level of competition in the interchange fee market.
Small Business Merchants: Do you feel like you have any leverage to reduce the cost of these fees or do they ever prevent you from accepting credit cards because they're too high?
By Sharon McLoone |
July 31, 2008; 10:48 AM ET
Previous: Senate Panel OKs Research and Tech Transfer Programs | Next: Dub Me Now Turns Business Cards into Bits and Bytes
Please email us to report offensive comments.
Posted by: R.J. | August 1, 2008 10:14 PM
Posted by: S. Mendoza | August 15, 2008 9:21 AM
The comments to this entry are closed.