Consumers Want Spotlight on Interchange, Merchant Poll Says

In what may mark the first time either side in the long-running dispute between merchants and card companies over interchange pricing has tried to measure public opinion on the matter, a merchant lobbying group this week released a survey indicating 94% of consumers agree that card networks should be required to reveal how much interchange they collect. Some 93% say the networks should be required to tell consumers how the pricing is arrived at, and 91% agree that Congress should take action to require the networks to be more open about interchange. Though hotly contested between retailers and banks, interchange up to now has remained a largely esoteric matter to the public, which pays the fee only indirectly and to the extent that merchants build it into their merchandise pricing. In the online poll, conducted last month among 2,214 U.S. adults by Harris Interactive on behalf of the Merchants Payments Coalition (MPC), 68% of consumers said they had never heard of interchange. Consumers aged 45 to 54, with a college degree, and married were more likely to have heard of interchange, according to the poll. Card-issuing banks collect interchange on each transaction from acquiring banks, which pass it on to merchants. The fees, typically consisting of a couple percentage points of the payment plus a fixed amount in cents, are set by the card networks. The MPC, a Washington, D.C.-based group of 18 retail trade associations formed in 2005 to lobby for interchange reform, charged in a statement that interchange costs the average family more than $300 a year. “The way credit card companies hide interchange fees is indefensible,” Mallory Duncan, MPC chairman and senior vice president and general counsel at the National Retail Federation (NRF) said in the statement. “Consumers want that to end. They want to know how much they're paying.” The survey results may add to pressure on the card networks over the interchange issue as Congress shows signs of interest in the issue and in the wake of merchant lawsuits. Christopher Dodd, D-Conn., chairman of the Senate Banking, Housing, and Urban Affairs Committee, has said he intends to hold a hearing on interchange as part of an overall investigation of the credit card business. Two other Congressional bodies held hearings in 2006. Also, massive antitrust litigation brought by merchants is pending in federal court. Besides the NRF, members of the MPC include the Food Marketing Institute, the National Association of Convenience Stores, the National Association of Chain Drug Stores, and the American Petroleum Institute.