WASHINGTON – In what is expected to be a preliminary step prior to introduction of a new bill, several U.S. senators called on Visa and MasterCard to make full disclosure of the fees charged during credit and debit card transactions.
The fee structure, the target of reform efforts in the House, has come under increasing criticism even as the two card giants have posted partial summaries on the Internet. Merchants who are required to charge the fees to customers – an estimated $42 billion last year – claim the two cards giants set the fees in tandem, in violation of antitrust laws. They want the ability to negotiate their own fees, with a federal panel overseeing the bilateral negotiations.
Interchange fees have become a lucrative revenue source for credit unions, which earned more than $3 billion in such income last year.
In letters sent to Visa and MasterCard, the senators demanded information about methodologies and specific data used to establish interchange fees. The letters are dated May 23 and demand the information by June 3.
The letters were signed by Democrats Richard Durbin of Illinois and Herb Kohl of Wisconsin, and Republicans Olympia Snowe of Maine and Arlen Specter of Pennsylvania.
“It is important that Congress fully understands the costs and fees imposed within the credit and debit card systems so we can ensure that these systems will continue to function effectively for all participants,” they said.
The letters follow hearings in the House Judiciary Committee on a bill that would allow a large merchant, such as Wal-Mart, to negotiate its own fees and have a three-person federal panel oversee the process. The huge amount of interchange fees paid by its customers have prompted Wal-Mart to seek its own bank charter in order to bypass the interchange system, but the company abandoned the plans because of vehement opposition by banks and consumer groups.
During the House hearings, representative from Visa and MasterCard insisted that the fees were set without consultation, even though they are very similar. They also claimed that most, but not all, of the fee information is readily available over the Internet.
But the retailers claim that some of the most important fees still are not public and the method in which they are disclosed on the Internet is difficult to understand.
