RILA: Visa U.S. Swipe Fees Unfair

May 3, 2010  by in UnCategorized   

By Home Furnishings Business in Furniture Retailing on May 4, 2010

An announcement last week that Visa cut interchange, or "swipe" fees on debit transactions in Europe has drawn criticism from the Retail Leaders Industry Association, an Arlington, Va.-based trade group of major retailers.

While Visa Europe agreed to cap debit card interchange rates at 0.2 percent for four years, in the United States the Visa debit card interchange rate rose nearly 30 percent in April to 0.95 percent plus $0.20 for every transaction.

The move also likely foreshadows further Visa increases on the fees paid by American retailers unless Congress acts soon on debit interchange reform, according RILA. Interchange fees, which are imposed by the card association and issuing banks to process the credit and debit card transactions, have tripled in the United States since 2001 to $48 billion last year and amount to a hidden tax on consumers.

These "swipe fees" are charged to every retailer, small or large, for every credit and debit transaction processed.  RILA noted a study released in March that identified swipe fees as stalling the creation of nearly a quarter million jobs.

"While most western economies have taken action to rein in excessive debit card swipe fees, here in the U.S. the credit and debit card industry continues to hurt retailers and consumers by setting rates indiscriminately and raising rates at will," said John Emling, senior vice president for government affairs at RILA. "Without interchange reforms in the U.S., reform in Europe means the credit card industry will look to American retailers and consumers to make up lost revenue. As Congress debates comprehensive financial reform, now is the time to bring appropriate oversight and transparency to interchange fees. ... The U.S. is fast becoming the only industrialized nation in the world that allows our own banks to stifle business growth by indiscriminately setting rates far above the cost associated with the service provided."

RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs and more than 100,000 stores, manufacturing facilities and distribution centers domestically and abroad.