The Obama Administration has signaled its support for two bills circulating in the House and the Senate that would place curbs on fees and other practices by credit card companies that are seen as harmful to consumers.
At the same time, retailers and the groups that represent them in Washington are calling on legislators to take a look at the true cost of interchange fees on businesses and consumers following Visa's decision to raise the fees it charges on card transactions.
The Food Marketing Institute's president and chief executive officer Leslie Sarasin, said in a statement, "At a time when consumers and retailers are fighting for their economic survival and just a few days after they paid their taxes, Visa's interchange fee increases are deplorable. Interchange is, in effect, a hidden tax on every plastic transaction, fixed by the credit card companies and banks in an anti-competitive market."
According to the Association for Convenience and Petroleum Retailing (NACS), credit card fees are the second largest operating expense. Interchange fees paid by the industry in 2007 more than doubled the pre-tax profits generated by convenience store operators that same year.
Discussion Questions: Should Congress pass legislation to limit or otherwise change the current interchange fee system? What would be the fallout if interchange fees were restricted?