The NRA said it has signed on as a plaintiff in a lawsuit against MasterCard and Visa credit card companies and other banks for violating federal antitrust laws. The complaint in the lawsuit seeks a permanent injunction barring the companies from continuing practices that violate antitrust law.
Interchange, a fee that is collectively set by Visa and MasterCard's member banks, is a percentage of each transaction sometimes accompanied by a flat fee that banks collect from retailers every time a credit or debit card is used to pay for a purchase, adding up to billions of dollars each year.
The complaint alleges that Visa and MasterCard are able to set these fees without apparent respect to the typical market forces, and do not provide operating rules to merchants so that many restaurants are not familiar with the rules and some do not even realize how much they pay in these "hidden" fees.
"Many of our members have expressed concern about the so-called 'hidden' fees that they are forced to pay in order to continue servicing their customers who use credit cards in their establishments," said Todd Mann, the association's senior vice president of business development. "Restaurants and retailers have been claimed to pay among the highest interchange rates in the world, despite the fact that the U.S. has one of the strongest financial systems with highly-advanced technological services and capabilities."
The fees are meant to cover the cost of processing a credit card transaction and the risk taken by the issuing bank that it will be repaid. However, reports show that both fraud and the cost of processing are steadily decreasing in the United States, while rates seem to continue to rise. The result, according to the complaint in litigation, appears to be a cash flow for MasterCard and Visa, and a drain on restaurant operators' and other merchants' bottom lines.
"It is critical that we find a way to slow the out-of-control interchange increases that place undue financial burdens on American restaurants, other merchants and their consumers," Mann said.
In the U.S., interchange impacts not only the merchants, but has the largest impact on American consumers. This "hidden" tax was estimated to cost approximately $26 billion in 2004, said the NRA.
To help combat these increasing fees on behalf of its members, the NRA has become a leader in the Merchants Payments Coalition, comprised of trade associations representing over half of the interchange transactions in the U.S. The members include restaurants and other retailers who accept credit and debit cards such as supermarkets, chain drug stores, convenience stores, department stores and gas stations. The coalition is committed to finding solutions that will stop the rapidly escalating interchange fees that are hurting American restaurants, retailers, and consumers.