Business

<< Previous   of   Next >>   ADVERTISEMENT   CONTACT THE HERALD Mike Benbow, Business Editor benbow@heraldnet.com   Published: Friday, May 16, 2008 Retailers, credit-card firms bicker over fees Associated Press WASHINGTON -- Americans' increasing preference for paying with plastic has pitted retailers against credit-card companies in a dispute over the cost of the billions of transactions. Retailers accused Visa and MasterCard during a congressional hearing Thursday of levying excessive fees, while the card company executives countered that retailer-supported legislation would simply push more of the cost onto consumers. The exchange, which took place before a House Judiciary Committee antitrust task force, shined a light on a lesser-known aspect of the credit-card industry: the so-called "interchange fee" that merchants pay to banks on all electronic transactions. The dispute has intensified as plastic has become the preferred payment method. A majority of transactions are now done electronically, said Rep. Lamar Smith. R-Texas, up from roughly 20 percent 10 years ago. That number will reach 70 percent in three years, he added. The interchange fee, which Visa says averages about 1.6 percent, differs depending on the merchant and type of card. The fees are set by Visa and MasterCard but are collected by the merchant's bank as part of a larger charge for processing the transaction. The credit card companies say they don't receive revenue from the fees. Tom Robinson, who operates 34 gas stations and convenience stores in Northern California, complained that the fees are set collectively by the credit card companies and large banks in violation of antitrust laws. They are presented to merchants as a "take it or leave it offer," he told lawmakers. Convenience stores paid $7.6 billion in card fees last year, Robinson said, up $1 billion from 2006 and double the industry's pretax profits of $3.4 billion. Robinson testified on behalf of the National Association of Convenience Stores. The National Retail Federation says merchants will pay banks $48 billion in credit card fees this year, up from $16 billion in 2001. That amount is largely passed on to consumers, costing U.S. families more than $400 annually, the group says.

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