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WASHINGTON - Joining the Food Marketing Institute in its fight against credit card fees, the National Retail Federation yesterday urged state legislators from across the nation to continue efforts to control the $36 billion in credit card interchange fees paid by consumers each year, saying state legislation will help focus public attention on the little-known charges.
"The activities you are doing in the states to shine a light on these fees and make consumers aware of them is an important step in the right direction," NRF s.v.p. and general counsel Mallory Duncan said in a statement. "When Visa and MasterCard take their cut, they don't take it on just the retail sale, they take it on the entire transaction including the sales tax. That's not their money. The sales tax is the people's money, and they shouldn't be trying to take a piece of it. That drives up prices even higher, and everybody ends up paying a tax on a tax."
Duncan spoke yesterday at the National Conference of State Legislatures' Spring Conference in Washington as part of a panel discussion on credit card interchange. He told legislators interchange is of particular concern in regard to sales tax because it is added to the transaction after sales tax has been applied to purchases, resulting in a larger fee than if it applied only to merchandise. Retailers are required to remit the entire sales tax amount to state treasuries, so merchandise must be priced high enough to compensate for the interchange charged on the sales tax, he said.
As Progressive Grocer previously reported, nine states have introduced at least 15 bills on interchange this year, including measures to ban interchange fees on the sales tax portion of transactions in Florida, Kansas, Nevada, New York, and Washington. Kentucky, Nebraska and Texas have introduced bills requiring credit card companies to be more transparent in disclosing rules and fees. A bill in Tennessee would cap interchange rates at 0.75 percent. Some states have multiple bills pending addressing various aspects of interchange.
The state action follows growing interest on Capitol Hill in the past year. No federal legislation has been introduced, but the Senate Judiciary Committee last year held a hearing on whether interchange practices violate federal antitrust law. The Senate Banking, Housing and Urban Affairs Committee plans to hold a hearing on interchange this year, and the Senate Homeland Security and Government Affairs Committee may include the issue in its investigation of abusive credit card industry practices and fees. Meanwhile, 50 antitrust lawsuits on the issue are pending in U.S. District Court in New York.