WASHINGTON - The credit card interchange market "is rigged to guarantee big money for the largest banking institutions" and "tighten the noose on businesses," NACS Vice Chairman Dave Carpenter told Congress in reference to the damage that credit and debit card interchange, or "swipe," fees cause to small, community businesses.

Carpenter testified today before the U.S. House Judiciary Committee on behalf of NACS members during a hearing on H.R. 2695, the Credit Card Fair Fee Act. He is president and CEO of J.D. Carpenter Companies Inc., based in Urbandale, Iowa, which operates six Shortstop convenience stores and a local community bank, Liberty Bank.

"I am fortunate to be able to serve my community in Iowa as a both a retailer and a community banker. From either of my vantage points, these fees have long been out of control, and they are nearly suffocating my retail stores while yielding no profit at all for my community bank," said Carpenter.

Carpenter said that the amount he pays in card fees at one of his stores is twice what he pays in rent, four times more than utilities, and 30 times more than health insurance. Worse, he noted, "There are no other realistic options: Our customers expect us to accept these cards, and all of our competitors accept them ?" there simply is no business without accepting cards."

Credit and debit card swipe fees ?" called "interchange fees" by the big banks that set these rates ?" are a percentage of each transaction that Visa and MasterCard and their member banks collect from retailers every time a credit or debit card is used. These fees average about 2 percent in the United States, the highest rate in the industrialized world.

In 2008 alone, Americans paid more than $48 billion in swipe fees. These fees are non-negotiable and set in secret by the credit card companies and their member banks.

"Policymakers truly need to begin to see payment cards as a new form of currency, because at 80 percent of my fuels sales and growing, that is what payment cards have become and will be in the future," said Carpenter. "I believe we have reached the point that the process of determining these fees cannot be left solely to the whims of the people sitting in the board rooms of the credit card companies."

"The increases that I am seeing in credit and debit card fees are simply unsustainable," he said. "The amount I paid in card fees last year was considerably more than I pay on my entire debt service on my investment capital in the business. If interchange fees were half of what they currently are, I could support more than $7.5 million in additional investment capital that I could use to open more stores and provide more jobs in my community. With lower interchange fees, I could also lower prices. And lower prices mean more sales."

Carpenter also disagreed with the banking community??s assertions that reducing interchange fees would harm small, community banks.

"Interchange fees have little significance for (my bank) in terms of revenue or profit, and I understand the same to be the case for most other community banks. This is simply not an item that is significant to the business. In fact, changes to the system might help. Right now, we compete with other banks for customers on the basis of price and service. But there is no price competition on interchange fees. If there were, we might have more ways to attract customers and increase this part of our business. But the way it is, the huge banks make big money on interchange and market heavily to our customers through direct mail and otherwise. My bank has not been able to effectively compete with that, given that part of the competitive playing field is closed."

Today??s hearing, which begins at 10:00 am EST, can be accessed via a live webcast.