Consumer Rights at Stake
as U.S. Senate Examines Interchange Fee

Americans for Consumer Education & Competition
Urges Congress to Protect Consumers as Big Retailers
Move to Impose Check Out Fees on Those Who Pay with Plastic

Washington, D.C. (July 17, 2006) – Americans for Consumer Education & Competition (ACEC) said today that the Senate Judiciary Committee hearing on July 19th entitled “Credit Card Interchange Rates: Anti Trust Concerns?” should shed light on merchants’ desire to penalize plastic paying customers with check out fees and examine the fall out of interchange fee regulation in Australia. Merchants pay a discount rate for the cost of processing electronic payments which includes an interchange fee.

"An overwhelming majority of America’s consumers (89%) believe imposing check out fees or surcharges on those who pay with plastic is an unfair practice according to a 2006 national survey sponsored by ACEC," said Rebecca Reid, Executive Director of the consumer organization that advocates for consumer rights and financial literacy. "Australian merchants said they would lower prices for consumers upon regulation of that country’s interchange fee and not only did they renege on that promise, they began surcharging customers who preferred electronic payment to cash. Let’s not repeat recent history."

Reid cited Datamonitor’s independent analysis last year of the impact of interchange fee regulation in Australia. The report notes, "Taken collectively the direct impacts of the interchange reforms on consumers have been wholly negative. They are paying more in annual fees for credit cards and loyalty schemes, some retailers are now surcharging for credit card usage and they are not seeing lower prices at the checkout." She also noted a comment that appeared in American Banker in May 2005 by Mallory Duncan, a senior vice president and the general counsel at the National Retail Federation. He is quoted as saying, "merchants have always wanted the right to surcharge."

"The big retailers in this country have joined forces in the name of protecting the consumer, but in fact, merchants want to pass on the cost of providing electronic payment to their customers. They can bring more buyers into their store if they offer electronic payment, which in turn beefs up their volume and increases their sales," said Reid. "But that’s not enough. They want consumers to pay for the service they offer. Should consumers pay for the store electricity and water bill too?"

Myriad surveys indicate consumers prefer to use their debit card these days over cash for purposes of convenience and security. Consumer behavior shows an unstoppable trend toward the preference of electronic payment.

"This is the 21st century. We are buying items through the Internet, paying bills, banking online and buying goods at our local stores with the swipe of a card," asserted Reid. "Consumers who pay with plastic shouldn’t be discriminated against for preferring an easy and safe choice of payment."

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FOR MORE INFORMATION, CONTACT:
Rebecca Reid
Executive Director
Americans for Consumer Education & Competition
Office: 410-267-1128 or 410-267-1129 Cell: 410-212-3843