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Retailers Claim They Finance 'Arms Race' in Cards

Retailers testifying before Congress today on credit card interchange will claim card issuers are using their fees to finance ever greater marketing enhancements and rewards programs for their card products.

By David Morrison | Updated on October 07, 2009

Retailers testifying before Congress today on credit card interchange will claim card issuers are using their fees to finance ever greater marketing enhancements and rewards programs for their card products.

“There is an arms race to create cards with higher fees and more bells and whistles,” NRF Senior Vice President and General Counsel Mallory Duncan argued in a prepared release of his testimony. “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. The Welch-Shuster bill would allow the most expensive cards to be refused, and while we expect 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.”

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