Fee fight: retailers attack credit card 'interchange' charges.

Retailers are pushing Congress to challenge the credit card industry's little-known "interchange" fees, which make up an average 2 percent of the purchase price in every consumer transaction.

In a conference call with New Hampshire retail industry representatives April 15, a group called the Merchants Payment Coalition said it would push U.S. Rep. Paul Hodes, a member of the House Finance Services Committee, to help lower the fees or make them more transparent to consumers.

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The call was part of a national campaign called UnfairCredit CardFees.com that kicked off March 30. The goal is to target constituents in all eight of the House committee members' districts by making noise about credit card fees retailers say are hidden from consumers.

"If a customer makes a $100 purchase, $2 is taken out and sent back to the bank that issued the card," said Mallory Duncan, a lawyer for the National Retail Federation. "It's probably the largest credit card fee that you've never heard of. And that's intentional."

The credit card industry defends the fees as the small price merchants pay for the convenience of being able to accept credit cards--a service that brings them more customers and higher sales. Merchants say the fees force them to either raise prices, decreasing their competitiveness, or absorb the costs themselves. They also say the fees inflate the cost of nearly everything consumers buy, even when cash is used. Duncan said the amount of interchange fees collected in the U.S. has tripled in the last decade, from $16 billion to $48 billion.

But Trish Wexler, spokeswoman for the Electronic Payments Coalition, a group representing banks, payment networks such as MasterCard and Visa, and card processors, said if interchange fees didn't exist, banks would be more selective about issuing credit cards or pass the cost onto consumers. She also challenged the notion that retailers would pass the savings onto consumers if given a break on their interchange fees.

The conference call included two representatives of the New Hampshire retail industry--Dwight LaFountain, general manager of New Hampshire-based convenience store chain Jiffy Mart, and John Dumais of the New Hampshire Grocers Association.

Dumais said in some cases the credit card fees merchants pay out for selling an item are higher than the profits they bring in.

"We have a lot of stores that are just barely getting by now, profit-wise, and the credit card fees are hurting them so that many times they're not making a profit at all," he said.

Wexler contended, however, that it's not actually the mom-and-pop retailers that are behind this push to lower interchange fees, but major retailers like Target, Wal-Mart and Best Buy.

--ASHLEY SMITH/THE TELEGRAPH