Taking Down Fee Barriers

Editorial by NACS emphasizes need to eliminate lingering barriers to competitive interchange.

June 30, 2015

NEW YORK – In an editorial published yesterday on PaymentsSource.com, NACS Senior Vice President of Government Relations Lyle Beckwith addressed the increasingly tenuous hold of the big credit card companies, as their antitrust violations continue to come to light.

“There is more work for courts, regulators and legislators to do in order to bring price competition to a market that has been stunted by the lack of it for decades,” writes Beckwith, adding that “It’s high time that happened.”

Despite a recent ruling that prevents American Express from continuing their practice of prohibiting merchants from promoting other cards, the card company is planning to appeal, even as it announced that it will accede to the ruling during the appeals process. 

No big surprise that merchants have long been unhappy with the kinds of terms that are all-too-common from card companies. Retailers who sell products like groceries or fuel often subsist on miniscule profit margins. When American Express has rules that distort the market so prices can only rise, merchants too often end up paying fees higher than their profits.

“That means consumers pay more, even if they don’t use a credit card,” writes Beckwith.

“Making the card business more like the rest of our free-market system is going to take a while, but this is an important step in the right direction. Now the system hurts consumers with higher prices, and hurts small merchants whose second-largest operating cost on average is these swipe fees. It also keeps retailers from expanding which hurts the entire economy,” concludes Beckwith in his editorial.

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