Coalition of Merchants Praises Congress for Hearings on Credit Card Company Practices

On Tuesday, the Merchants Payments Coalition, a group of nearly 30 associations representing almost 2.7 million stores, applauded a congressional hearing on unfair credit card practices. The hearing, held by the Senate Permanent Subcommittee on Investigations, is one of several held this year to investigate the allegedly unfair practices imposed on consumers and merchants by credit card companies.

Earlier this year, the Senate Banking Committee held a hearing on the billing, marketing, and disclosure practices of the credit card industry. In addition, MPC Chairman Mallory Duncan, senior vice president, and general counsel at the National Retail Federation testified on behalf of the MPC during a July hearing on credit card interchange held by the House Judiciary Committee's Antitrust Task Force.

Duncan contends that Visa and MasterCard practices in setting interchange fee rates have constituted a violation of federal antitrust laws, and advocated for a payment system that is transparent and open to competition.

"This hearing is another example of how serious the issue of credit card abusive practices is for everyone. The credit card industry has profited from outrageous fees," said Duncan.

The "interchange" fee represents a percentage of each transaction that Visa and MasterCard and their member banks collect from retailers every single time a credit or debit card is used to pay for a purchase. The fee varies with type of merchant, transaction, and card, but averages out to roughly 2% transaction.

This fee is the reason why some merchants require a minimum purchase of X amount before they will permit a patron or customer to make their purchase using a credit or debit card.