Jan 26, 2010
ARLINGTON, VA – January 26, 2010 – The Food Marketing Institute (FMI) commended the California Assembly Banking & Finance Committee and its Chairman Pedro Nava (D) for investigating credit card interchange or “swipe” fees – hidden charges added to every plastic transaction that cost Californians nearly $5 billion a year and all Americans more than $48 billion.

“Reforms are needed to create a transparent process for businesses to negotiate rates and enhance public awareness of interchange fees, which continue to increase,” testified FMI Director of Government Relations Liz Garner before the committee yesterday.

“Card companies and banks collect an interchange fee averaging about 2 percent on every credit and debit card transaction, and can raise the rates at any time by any amount,” she said. In fact, the total cost of interchange tripled since the beginning of the decade due to increases in the fees and card use.
She described legislation pending in the U.S. Congress that would address these issues:


  • The Credit Card Fair Fee Act, introduced in the House (H.R. 2695) and Senate (S. 1212), empowers retailers to negotiate fees with card companies and banks.

  • The Credit Card Interchange Fees Act (H.R. 2382) requires disclosure of transaction fees and card acceptance rules. It would not allow rules that might foster competition in the marketplace such as allowing retailers to give discounts to customers who pay with debit or credit cards that carry low fees. Other rules prevent retailers from promoting discounts for paying with cash.

As a result, all customers bear the cost of interchange, whether they pay with plastic, checks, cash or food stamps.

The purpose of the California hearing is to gather facts about interchange issues and explore steps the state legislature can take to help resolve them.