Santa’s Not the Only Surprise This Season,
According to NACS
With all the hidden credit card fees that must be paid, a modern version
of the popular Christmas tune the “The Twelve
Days of Christmas” should be renamed the 12 “daze”
of Christmas.
For instance, PNC Financial Services Group’s
annual Christmas Price Index that calculates giving true loves every
item in the cherished “Twelve Days of Christmas”
– from 12 drummers drumming to a partridge in
a pear tree – would cost more than $75,000 in
2006. However, the bank conveniently leaves out the hidden cost of
credit card interchange fee that consumers pay, which adds upwards of
$1,500 to this fabled purchase.
Interchange is a percentage of each transaction that Visa and MasterCard
banks collect from merchants every time their credit or debit cards are
used to pay for a purchase. The fee varies with type of merchant,
transaction and card, but averages close to 2 percent for most credit
card transactions.
In 2005, U.S. consumers paid more than $30 billion in interchange fees
when using MasterCard or Visa cards, double the amount they paid in ATM
and late fees combined.
Shockingly, interchange rates vary significantly by country, and U.S.
rates are among the highest in the world, despite having the
most-advanced technology infrastructure to process transactions. For
instance, in the United Kingdom, consumers hoping to play “Father
Christmas” pay interchange rates roughly half
of those in the United States.
“The Grinch can’t
hold a candle to the credit card companies,”
said NACS Vice President of Government Relations Lyle Beckwith. NACS is
a founding member of the Merchants Payments Coalition (MPC), a group of
about 20 trade associations representing the retail community that is
fighting for a more competitive and transparent card system that works
better for consumers and merchants alike.
The cost of items referenced in “The Twelve
Days of Christmas” increased about 3 percent
over the past year, according to the PNC survey, while interchange fees
increased at a rate nearly six times greater –
17 percent, according to the MPC.
“It is outrageous how much Visa and
MasterCard and their member banks are needlessly saddling consumers with
these hidden fees that grow every year,”
added Beckwith. “Among other things, these
fees are fueling the flood of ‘pre-approved’
credit card come-ons stuffing consumers’
mailboxes, and making shredders a popular Christmas gift for consumers
concerned about identity theft.”
“Visa and MasterCard rules effectively
require that interchange be built into prices and make cash discounts
all but impossible, so these fees take money out of consumers’
pockets regardless of how they pay,” Beckwith
added.
Given Visa and MasterCard’s refusal to fully
disclose operating rules that govern interchange, Beckwith added one
hope: “Perhaps these credit card companies’
resolution for 2007 should be that they provide greater transparency as
to why U.S. consumers pay more than $30 billion a year in interchange
fees, lining the companies’ pockets and
funding everything from junk mail to marketing gimmicks that benefit
neither consumers nor retailers.”
NACS, the association for convenience and petroleum retailing, is an
international trade association representing more than 2,200 retail and
1,800 supplier member companies. The U.S. convenience store industry,
with over 140,600 stores across the country, posted $495.3 billion in
total sales in 2005, with $344.2 billion in motor fuels sales.
See the original story at: http://eon.businesswire.com/releases/christmas/interchange/prweb490533.htm
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