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Small Businesses Offer Senate Testimony Against MasterCard and Visa Over Interchange Fees

by Peter Andrew

Small

Businesses Offer Senate Testimony Against MasterCard and Visa

Over Interchange Fees

Merchant association representatives went head-to-head with

MasterCard and Visa representatives today at a Senate Judiciary

Committee hearing that asked the question "Credit Card

Interchange Rates: Antitrust Concerns?" While merchants

accused MasterCard and Visa of secretly colluding to fix prices

at ever-higher levels, the credit card companies said the dispute

was a business disagreement, and that antitrust does not come

into play when merchants have many other options to accept customer

payments.

Testimony

included that of Kathy Miller, owner of the Elmore Store in

tiny Elmore, Vermont, who said that growing interchange fees

are making it more and more difficult to run her business profitably.

Representatives from MasterCard and Visa said there is no price

fixing and that interchange rates come from the individual card

issuers, not directly from MasterCard and Visa. Joshua Peirez

of MasterCard testified that there is an inconsistency in MasterCard

and Visa being singled out for antitrust concerns when American

Express is known to charge higher rates on average than MasterCard

or Visa issuers.

Interchange

fees are those fees that merchants pay in order to accept and

process customers' credit card transactions. According to today's

testimony from Visa General Counsel Joshua Floum, those fees

currently average about 2.2% of each credit card transaction.

Vermont

Senator Patrick Leahy, the Senate Judiciary Committee's Ranking

Member, acknowledged the arguments of both sides in the dispute.

Leahy noted that the European Union?s Competition Authority

has warned Visa and MasterCard that unless they change their

interchange fees in Europe, they will face an antitrust action.

Whether Congress will take any action concerning this dispute

in this country is still unknown.

Full

testimony from today's hearing is available at the Senate

Judiciary Committee Web site.

Published 07/19/06 (Modified 05/07/12)


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