![]() ![]() The Credit Card Competition Act would reduce access for millions of Americans. households to fully participate in the economy. A reduction in interchange fees may cut off more low-income people from credit cards altogether, which is precisely what happened when we cut the interchange fees for debit cards.Īccess to credit is more important than ever for U.S. Note that 2 is an average, and fees incurred on transactions with American Express and Discover cards tend to be the highest. Allowing merchants to use another network to process credit card transactions will ultimately result in credit card issuers eschewing those who cost them the most-namely, the lower-income households who are more likely to declare bankruptcy or make relatively few transactions. On a 1,000 purchase, the business must pay 20 to the payment processing network for the card used by the customer. One indication of the motivation of the legislation is the fact that American Express AXP and Discover, the second and sixth-largest issuers, are inexplicably exempt: Amex is only slightly smaller than Mastercard so its exemption is baffling, but Discovery’s exclusion makes perfect sense: Its headquarters happens to be in Senator Durbin’s home state of Illinois.Ĭredit cards help facilitate safe and secure transactions, and the providers spend a lot of money to provide such a service-one which protects us from liability from fraud or theft, among other things. For these fees to be inflationary they would have had to be drastically increasing. In some cases, we are charged card network fees that are not broken down by customer, transaction count, or card volume, and in those cases we may allocate those card network fees to applicable customers using our reasonable judgment.Also, the contention that credit card reward fees raise prices via higher interchange fees is up for debate: A study I wrote with Chris Richardson, a financial economist and former colleague, found no evidence that the cap on interchange fees on debit cards affected consumer prices, but it did result in fewer consumers with debit cards, since it made millions of low-income households unprofitable for banks to keep as debit card customers.Īnd the notion that credit card fees cause inflation, as the bill’s co-sponsors assert, is risible: Inflation is an overall increase in the price level over time, and interchange fees have been more or less stable the last few years. If we elect not to charge you, we still reserve the right to begin charging you for those card brand network fees on a prospective, but not retrospective, basis. We may, from time to time, elect not to charge you for certain existing, new or increased card network fees. Below are some of the most common Amex interchange fees as of April 2021 from CreditDonkey. This is simply a list of possible fees that some card brand networks charge. The fees listed below do not include all fees that the card brand networks charge or may charge in the future, and these fees do not apply to every transaction. By clicking the “What are Visa’s fees?” “What are Mastercard’s fees?” and “What are American Express’s fees?” tabs below, you can find examples of the additional fees charged by the card brand networks. This method allows us to offer a more competitive program, reduce your overall cost, and improve your bottom line. To avoid charging higher rates across all transactions, any additional card network fees that are triggered are simply passed through directly, with no mark-up. ![]()
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