FMI Praises California Banking Committee for Probing Credit Card Swipe Fees

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FMI Praises California Banking Committee for Probing Credit Card Swipe Fees

The Food Marketing Institute (FMI) commended the California Assembly Banking & Finance Committee and its chairman, Pedro Nava (D), for investigating credit card interchange or “swipe” fees — hidden charges added to every plastic transaction that cost Californians nearly $5 billion a year, and all Americans more than $48 billion.

“Reforms are needed to create a transparent process for businesses to negotiate rates and enhance public awareness of interchange fees, which continue to increase,” testified FMI director of government relations Liz Garner at a hearing before the committee earlier this week. “Card companies and banks collect an interchange fee averaging about 2 percent on every credit and debit card transaction, and can raise the rates at any time by any amount.” In fact, the total cost of interchange has tripled since the beginning of the decade, due to increases in the fees and card use.

Garner described legislation pending in the U.S. Congress that would address these issues as follows:

—The Credit Card Fair Fee Act, introduced in the House (H.R. 2695) and Senate (S. 1212), empowers retailers to negotiate fees with card companies and banks

—The Credit Card Interchange Fees Act (H.R. 2382) requires disclosure of transaction fees and card acceptance rules. It wouldn’t allow rules that might foster competition in the marketplace, such as allowing retailers to give discounts to customers who pay with debit or credit cards that carry low fees. Other rules prevent retailers from promoting discounts for paying with cash

As a result, Garner said all customers bear the cost of interchange, whether they pay with plastic, checks, cash or food stamps.