Sponsors
Billabong ▼ 0.000 | PPR ▲ +2.20 | American Apparel ▲ +0.015 | The Buckle ▲ +0.19 | Columbia ▲ +0.65 | Deckers Outdoor ▲ +0.47 | Dicks ▲ +0.96 | Foot Locker ▲ +0.56 | Genesco ▲ +0.46 | Iconix Brand Group ▼ -0.10 | Jarden Corp ▲ +0.31 | Nordstrom ▲ +0.95 | Luxottica ▲ +0.61 | Nike ▲ +1.49 | Pacific Sunwear ▼ -0.03 | Skullcandy ▲ +0.01 | Sport Chalet - 0 | Urban Outfitters ▼ -0.16 | VF Corp ▲ +1.12 | Quiksilver ▲ +0.01 | Zumiez ▼ -0.08 | Macys ▲ +1.38 | Tillys ▼ -0.10 |
Ticker Sponsor
Readers Say
Executive Edition is a must have
Executive Edition is a must have

Before Shop-Eat-Surf, there were two sites I paid for premium content on. One is Surfline, the other is the Wall Street Journal. One is about all things surf, the other, the best business content site in the world. Shop-eat-surf is the intersection of those two worlds. Shop-Eat-Surf provides everything from coverage of events, people, brands and trends. However, beyond the Executive Edition "wall" is more meaty analysis and interpretation of financial statements, business models and brand philosophies; why certain brands and companies are succeeding, where others aren't. The Executive Edition is a must have read if the business of surf and action sports are on your radar screen.

- By Jeff Berg, Co-owner, Surfline
The most up-to-date information
The most up-to-date information

“Shop-Eat-Surf is a great source for the most up to date information of what is going on in our industry. I always enjoy reading the articles and appreciate the effort from Tiffany and her team."

- By Richard Woolcott, CEO and Founder, Volcom
Industry Insight

MOSS ADAMS: Webinar 12/2 on internal controls to increase the value of your business.
AGENDA: 12/30 deadline to pre-register for Jan. 5-6 Long Beach show.
CIT TRADE FINANCE: Middle-market retailers cautiously optimistic for holiday.
Details on Industry Insight.


Tiffany Montgomery
Print This Article

Hearing shows credit and debit swipe fees cost federal government and taxpayers $116 million

By Press Releases
June 16, 2010 11:32 AM

WASHINGTON, June 16, 2010 – The National Retail Federation said a Senate hearing today on the $116 million in credit and debit card swipe fees paid annually by the federal government is further evidence of the need to bring card fees under control. 

“These numbers show that not even the federal government is immune from the credit card industry’s power to skim profits off the top of every transaction that takes place on plastic,” NRF Senior Vice President and General Counsel Mallory Duncan said. “The swipe fees that the card industry imposes on private industry retailers and their customers are bad enough. But swipe fees charged to the government are ultimately paid by taxpayers, even those who don’t hold a credit card. That means swipe fees are not only driving up prices for consumers but driving up taxes as well.”

“There’s a clear parallel here where the card industry sees retailers and their customers as well as the government and taxpayers as huge sources of revenue,” Duncan said. “Congress needs to bring these fees under control for both groups.”

Senate Majority Whip Richard Durbin, D-Ill., is scheduled to hold a hearing on swipe fees charged to the government this afternoon in his role as chairman of the Senate Appropriations Committee’s Subcommittee on Financial Services and Government. Witnesses are expected to include officials from the Treasury Department, Government Accountability Office, Amtrak and Visa. Also testifying will be a convenience store owner and consumer group representative emphasizing the need to address private sector interchange fees.

The hearing is expected to focus on a Treasury report released Monday showing that while the federal government accepts few card payments relative to its size, agencies nonetheless received more than 80 million credit and debit card payments for goods, services, fees and fines totaling $8.6 billion last year. The government paid more than $116 million in swipe fees, making plastic its single most-expensive form of collecting payment. The figures do not include the millions of credit and debit card payments accepted by the U.S. Postal Service.

Swipe fees – officially known as interchange fees – are a percentage of the transaction charged by card company banks each time a card is swiped to pay for a transaction. The fees average between 1 and 2 percent for debit cards and 2 percent or more for credit cards. Overall swipe fees charged to retailers and other business by Visa and MasterCard banks totaled $48 billion in 2008 and resulted in higher prices estimated at $427 for the average household.

Like retailers, the government is subject to a wide and complicated range of interchange rates depending on the type of transaction (sale of goods, loan repayments or fines, for example), the level of rewards points provided to the cardholder, and whether the card is present or not present (as in Internet transactions).

The Treasury report proposes that the government negotiate with card companies for a single percentage to be charged for all credit card transactions, and for a flat fee to be charged for all debit card transactions. The report also proposed a $10,000 limit on the size of transactions that could be accepted via cards, saying checks or other forms of electronic transactions would be cheaper for big-ticket transactions. Officials also want to bar the card industry from unilaterally raising fees or establishing new fees. Treasury estimated that the changes could reduce interchange costs between $35 million and $42 million, or about one third.

While today’s hearing is focused on federal costs, state and local governments across the country are also concerned about rising swipe fees. The City of Chicago alone, for, example, recently reported that it paid $7.5 million last year.

The hearing comes as a House-Senate conference committee is negotiating the final version of financial services industry reform legislation. The Senate version of the bill includes an amendment sponsored by Durbin that would require the Federal Reserve to set regulations that would result in “reasonable and proportional” swipe fees for debit cards that take into account banks’ actual costs for processing the transactions and the fact that paper checks drawn on the came accounts are paid at face value. The amendment would also make it easier for merchants to offer discounts or other benefits for customers who don’t use credit cards, and to set minimum purchase amounts for credit cards.

As the world's largest retail trade association and the voice of retail worldwide, NRF's global membership includes retailers of all sizes, formats and channels of distribution as well as chain restaurants and industry partners from the United States and more than 45 countries abroad. In the United States, NRF represents the breadth and diversity of an industry with more than 1.6 million American companies that employ nearly 25 million workers and generated 2009 sales of $2.3 trillion. www.nrf.com


Articles You Might Have Missed