Neither card issuers like credit unions nor card acceptors such as merchants are liable to be terribly happy with the recent General Accounting Office Report on the credit card interchange.
The recent Credit Card Responsibility and Disclosure Act instructed the GAO to study the issue and report how credit card interchange has changed over time, how credit card competition has affected consumers, the benefits and costs to merchants in accepting cards and the potential impact on consumers of the various options to reduce the interchange costs to merchants.
Essentially the GAO found that none of the four different strategies for reducing the cost of card interchange to merchants would be ideal.
“If these measures were adopted here, merchants would benefit from lower interchange fees,” GAO wrote in a highlight of the report. “Consumers would also benefit if merchants reduced prices for goods and services, but identifying such savings would be difficult. Consumers also might face higher card use costs if issuers raised other fees or interest rates to compensate for lost interchange fee income. Each of these options also presents challenges for implementation, such as determining at which rate to set, providing more information to consumers, or addressing the interests of both large and small issuers and merchants in bargaining efforts.”