Credit Card Issuers, Merchants and Interchange Fees

A war is raging and credit card issuers once again are finding themselves right in the middle of the battleground. Instead of the usual opponent, which is the consumer, now credit card issuers are finding themselves up against merchants. For a while now, merchants have complained about increasing processing fees, known as interchange fees, which banks charge every time a consumers uses a debit or credit card for payment.

In this confrontation, both sides have stated their reasoning behind their fight. Merchants state that the fees are excessive and negate any small profit margins that they may be seeing, which will cause an increase in prices to consumers who cannot afford to pay for higher prices. Credit card issues say that the service that they provide the merchants is much needed and these fees go to maintenance for devices and upkeep of service. Regardless of the reasons, interchange fees accounted for around forty-eight billion dollars in 2008.

Just as with the consumer and credit card issuers, it now seems like Congress could get involved. In fact, Congress is considering up to three bills that would regulate processing fees. If any bill passes, it would most likely allow merchants to enter into a collective bargaining agreement with banks when setting fees.