Members also stressed the importance of accepting credit cards and the disadvantageous position they find themselves in when negotiating with banks and card companies. Participants in the call, which lasted 90 minutes, also provided data on the relative costs of accepting alternative types of payment as well as the variety of fees charged on top of the base interchange rate for rewards and other specialty cards.
Interchange fees are paid by a merchant's bank to a customer's bank when merchants accept cards using networks like Visa or MasterCard.
A wide variety of AFP members participated, including businesses, universities, municipalities, and utilities. The GAO specifically sought AFP's membership for input because of its diversity to ensure an interchange fee study it was conducting has the necessary breadth to get a good picture of how interchange fees are affecting all organizations.
In addition to facilitating the call, AFP staff sent the GAO AFP's 2005 survey on interchange fees as well as other materials offering insight as to how business are affected by interchange. Following the call, AFP agreed to help the GAO collect additional data for its study.
The GAO study was mandated in the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009, (PL 111-24), which was signed into law by President Obama on May 22. The law calls for the GAO to examine how interchange fees are disclosed; merchants' ability to negotiate interchange fees; the costs incorporated into interchange fees; the consequences of the undisclosed nature of interchange fees; transparency; the ability to discount for cash; and competition. The interchange fee report is due to Congress before the end of 2010, along with recommendations for future policies on the fees.
AFP members in the past have expressed concern about skyrocketing interchange fees and their increasing dependence on card companies to do business. GAO researchers posed a number of questions on the conference call, including policy alternatives to address the costs and transparency concerns.
In addition to the GAO call, AFP's Government Relations Committee has met with legislators and their staff to discuss the impact the fees are having on American businesses. AFP will continue to engage legislators and regulators to ensure that they receive a balanced picture from American businesses and institutions of all sizes.