Mar 21, 2007

Retailers, Credit Card Companies Quibble Over Footing the BillBy Jeffrey H. BirnbaumWashington Post

Retailers and credit card companies normally love each other. In fact, it’s no exaggeration to say that they can’t live without each other. Except on Capitol Hill.

Here, retailers are lobbying intensively to try to persuade the federal government to force credit card companies to reduce the fees they charge merchants to use their cards. And the card companies are fighting back, accusing the merchants of seeking price controls.

“They collect a hidden tax, and it’s excessive,” said Steve Pfister of the National Retail Federation about the card companies.

“They want to shift their costs of doing business onto the consumer through price controls,” responded Rhonda B entz of Visa USA.

Lobbyists for both sides have been briefing lawmakers about “interchange fees” — the average 1.9 percent assessment that merchants pay on every credit card charge they make.

The card companies (and banks that issue the cards) say the fee is fair and necessary to cover both the cost of processing and of popular bonus programs that the cards often feature. Retailers and other businesses required to pay the fee say the amount is too high, violates antitrust laws and often all but erases their narrow profit margins.

Read complete article.