Washington, D.C. The National Retail Federation on Thursday warned Congress that credit-card companies are in an “arms race” to increase the $48 billion in “swipe” fees paid by merchants and their customers each year.
NRF also urged the passage of legislation that would put rules governing the fees under the jurisdiction of the Federal Trade Commission.
“There is an arms race to create cards with higher fees and more bells and whistles,” NRF senior VP and general counsel Mallory Duncan said. “The market checks that would normally exist to curb this escalation in fees are diminished because the card companies know that every merchant is required to take these expensive new cards or lose their ability to accept any cards.”
Duncan said that the Welch-Shuster bill would allow the most expensive cards to be refused. Although the company expects that few merchants would actually refuse cards if this were passed, it would make the card companies think before they reflexively introduce cards with higher fees, Duncan said.
“Most consumers don’t know it, but every time they swipe a rewards card with its miles and concierge services, they are driving up the price of everything they buy even higher,” Duncan said. The bill would require credit-card companies to disclose interchange rates, terms and conditions, and give the Federal Trade Commission authority to review interchange and prohibit any practices that violate consumer protection or anti-competition laws.
Merchants would be allowed to give cash discounts and set minimum credit-card purchase amounts, and could choose which credit cards to accept.