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."
Duncan testified before the House Financial Services Committee today during a hearing on H.R. 2382, the Credit Card Interchange Act of 2009, sponsored by Representative Peter Welch (D-Vt.), and co-sponsored by Representative Bill Shuster (R-Pa.)
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"Most consumers don't know it, but every time they swipe a rewards card with its miles and concierge services, they are driving up the price of everything they buy even higher," Duncan said. "This particularly hurts less-privileged Americans who don't have rewards cards or can't get cards at all because Visa and MasterCard rules effectively require that everyone pay the credit card price even if they are paying with cash, check, debit card or even food stamps."
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