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Fighting the credit card stranglehold
Visa credit cards.
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TEXT OF STORY
Steve Chiotakis: Congress is debating limits on interest rates and fees paid by credit card users. The bill -- which could reach the Senate floor in days -- has touched off a separate battle over the fees credit card issuers charge merchants. Here's Marketplace's John Dimsdale.
John Dimsdale: Every time you use a credit card, the store pays a fee to the credit card company. And those fees added up: $48 billion last year, according to merchants.
Consumer advocates like Ed Mierzwinski at U.S. PIRG, say two companies have a stranglehold on retailers:
Ed Mierzwinski: Mastercard and Visa are so ubiquitous that if you don't take Mastercard or Visa, you will lose business. And that's the hammer that Mastercard and Visa hold over the merchants' head, and it's a very effective hammer.
Card issuers say there's no monopoly on retailers.
Trish Wexler is a spokeswoman for banks and credit card companies:
Trish Wexler: Most recently, there are a good deal of new entrants into the marketplace of PayPal or Revolution Money. The industry is growing and it is fiercely competitive.
Retailers, though, are asking Congress to give them more say in negotiating lower fees, which they claim would reduce prices for everybody.
In Washington, I'm John Dimsdale for Marketplace.
some of those fees pay for the 7% losses on cards held by people that shop that are not credit worthy. take those people from the economy and see how the merchants feels. 2% for a guaranteed sales is very cheap in the big picture in this economy.
I'm not usually a big fan of unionization, but this is the example case of where organizing is a good idea! (As a band-aid to the real problem: unchecked greed...) If the merchants banded together to negotiate a more reasonable cost with the card issuers, I would bet the situation would become more tolerable.
Alternately, the card issuers could do something that wouldn't force such an untenable response.
(Why are laws made? Because someone's doing something they shouldn't! Do good and you'll be free to continue to do it your way.)
