A Wall Street Journal item on interchange fees
No surprise, this argument didn't carry much weight with merchants, who have
A second reader wrote, “Since 2001 credit card companies have raised their interchange fees 300%. That's an enormous increase and one that can only be explained by the fact that just two companies, Visa and MasterCard, control fully 80% of the market... This is the only business expense I can't negotiate as a small business owner.”
A third wrote, “Mr. Zywicki states that the average interchange rate is under 2%. Unfortunately almost no one pays those teaser rates. The rate for rewards cards and business cards is more like 3.5%. Since most cards today are rewards cards, our small bakery paid well over 3.5% in total fees during our last year in business.”
A fourth wrote, “Banks today compete to gain cardholders by offering increasingly generous card rewards. These rewards are merely transfers from consumers to themselves in the form of higher retail prices, with the banks taking a substantial cut. This provides no real economic benefit. Merchants big and small have little or no ability to push back against higher fees and are forced to compensate by raising prices, resulting in an inefficient system harming American consumers and the wider U.S. economy.”