Merchants Payments Coalition (MPC) is taking Visa to task asking why Visa refused to consider lowering interchange fees even if fraud is reduced after merchants invest billions in new security technologies.
The MPC refused to commit to lowering the $50 billion in interchange fees American merchants pay every year to the banks and card brands when asked during a hearing in the House Small Business Committee this week.
The Merchants Payments Coalition, an advocacy group, and members of the committee saw through Visa’s statement. Ranking member Nydia Velázquez (D-NY) noted in her question that historically, Visa has defended its high interchange fees as covering the cost of fraud, so logically if fraud goes down so should the fees.
MPC asserts Visa’s contradictory statement makes it clear; it is committed to ensuring record profits for itself and the banks on the backs of the American consumer and merchants, regardless of the fraud rate.
Even more extraordinary, the Visa witness went on to claim that the card company sets its prices “competitively” to attract both issuing bank and merchant acceptance. In fact, the broken credit card market does compete for banks to issue their cards by promising additional profits with high interchange fees.
Conversely, Visa and the other brands have used the “take it or leave it” approach for merchants leaving them with no negotiating power on interchange rates.
MPC noted when a Visa executive told committee members that Visa’s fees are “very competitive,” Rep. Velázquez said: “I can’t help but laugh.”
The Merchants Payments Coalition – UnfairCreditCardFees.com – is a group of retailers, restaurants, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses fighting unfair credit card fees and for a more competitive and transparent card system that works for consumers and merchants alike. The coalition’s member associations represent about 2.7 million stores with 50 million employees.
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