Apr 29 2010
VISA cuts swipe fee in Europe and raises it in the US

In spite of the recent study that came out with the fact that the swipe fees are stalling the creation of close to a quarter million U.S. jobs, VISA raised its debit card interchange rate for American retailers to .95 percent plus $.20 per transaction in April, according to the Retail Industry Leaders Association. On the contrary, Visa Europe announced on Monday that it would be capping transaction fees at 0.2 percent for the next four years.

A spokesperson for Visa, Inc. said that the average Visa Debit transaction fee rose by less than 4 percent.

“Most of Visa’s U.S. debit rates have not changed,” she said. “Visa, Inc., did recently make a variety of program and interchange modifications to make digital currency even more convenient for consumers and merchants and to facilitate continued growth for Visa and its clients.”

Interchange fees, which are imposed by the card association and issuing banks to process the credit and debit card transactions, essentially function as a hidden tax on consumers. U.S. banks raked in more than $48 billion in interchange fees in 2008 alone, an amount that has tripled since 2001. These “swipe fees” are particularly harmful to small businesses, which often face higher rates than larger businesses.

Many countries around the world, including Australia, New Zealand, Canada, and the European Union, have already taken action against excessive hidden interchange fees, but the U.S. has yet to pass significant debit reform. The House Judiciary Committee is holding a hearing today on Capitol Hill to discuss legislation that would require Visa Inc. and MasterCard Worldwide to negotiate interchange rates with merchants, with the U.S. Department of Justice overseeing those negotiations.

“While most Western economies have taken action to rein in excessive debit card swipe fees, here in the U.S., the credit and debit card industry continues to hurt retailers and consumers by setting rates indiscriminately and raising rates at will,” said John Emling, senior vice president for government affairs at Retail Industry Leaders Association, in a statement. “Without interchange reforms in the U.S., reform in Europe means the credit card industry will look to American retailers and consumers to make up lost revenue. As Congress debates comprehensive financial reform, now is the time to bring appropriate oversight and transparency to interchange fees.”

A Visa, Inc., spokesperson condemned the legislation for “unnecessarily stepping in between business entities and picking favorites among its constituents; creating a system that is inherently anti-consumer and pro-retailer.”

“Visa welcomes the interest shown in electronic payments by the House Judiciary Committee. We hope this hearing helps Members see the harm that this overreaching legislation will cause if retailers are allowed to disrupt a payment system that has served everyone well for over 50 years,” the spokesperson said.

Emling says he’s worried that if Congress does not act quickly, Visa will continue to raise its rates on American retailers.

“The U.S. is fast becoming the only industrialized nation in the world that allows our own banks to stifle business growth by indiscriminately setting rates far above the cost associated with the service provided,” he said.

FTC - Site employs income earning affiliate linking

Written by

View all posts by: