Merchants Gain Nothing From Interchange, Report Says

WASHINGTON - The Merchants Payments Coalition here yesterday said an independent new report confirms that "merchants get nothing" out of programs that constitute nearly half of the $30.7 billion in credit and debit card interchange fees Visa and MasterCard collect annually in the United States. "A New Business Model for Card Payments," issued by Chicago's Diamond Management and Technology Consultants, noted that "processing -- the original reason for interchange -- comprises only 13% of interchange costs." Meanwhile, the largest component of interchange, paying for issuer rewards programs, accounts for 44% of interchange costs, the report added. The Merchants Payments Coalition is a group of about 20 trade associations representing retailers, restaurants, supermarkets, drug stores, convenience stores, gas stations, on-line merchants and other businesses that accept debit and credit cards. "This report corroborates the message that merchants have communicated to lawmakers over the past year -- that interchange fees are far, far higher than the actual benefits delivered to both merchants and the vast majority of consumers," said MPC Chairman Mallory Duncan, senior vice president and general counsel at the National Retail Federation here, in a statement.