A much-anticipated government report on interchange finally appeared Thursday — and hardly seemed worth the wait.
After months of studying interchange fees and how they affect issuers, merchants and consumers, the Government Accountability Office said Thursday that rising fees have increased costs for merchants, but that the current proposals for regulating such fees are flawed.
If any of the proposals for reducing interchange rates were adopted, "merchants would benefit from lower interchange fees. Consumers would also benefit if merchants reduced prices for goods and services, but identifying such savings would be difficult," according to the report, which the GAO posted on its Web site Thursday. "Consumers also might face higher card use costs if issuers raised other fees or interest rates to compensate for lost interchange fee income."
Those conclusions seem unlikely to affect the feud between merchants and payments companies, which has intensified this fall as Congress considers three bills to regulate interchange.
"It tries to give both sides, and for that reason the merchants can't be that happy," said Duncan MacDonald, a former general counsel of Citigroup Inc.'s Europe and North America card businesses. "At the end of the day it keeps the problem of abusive interchange pricing front and center. And that can't be good for the issuers."
The GAO study was ordered by the credit card law that President Obama signed in May.
Both sides of the debate had eagerly awaited the report, hoping it would provide them ammunition.
And sure enough, after the study came out both sides were quick to claim victory.
Mallory Duncan, senior vice president and general counsel of National Retail Federation, said in a press release that the report "confirms what we have been saying about swipe fees for years — that they drive up costs for consumers and are a cash cow for banks."
Banking and payments industry groups, unsurprisingly, emphasized different takeaways.
"The GAO study confirms what we have long understood," Kenneth J. Clayton, the American Bankers Association's senior vice president and general counsel for card policy, said in a press release. "It is consumers that will ultimately be harmed if Congress steps in to lower what merchants pay to accept debit and credit cards."
The Electronic Payments Coalition sounded a similar note.
"The GAO's report leads to a clear conclusion: current interchange legislation places the needs of giant retailers over the needs of consumers," the coalition said in a press release.