New GAO report sheds light on issues with credit card ‘swipe fees’

A newly released report by the Government Accountability Office confirming that credit card interchange fees increase costs for merchants has led to many organizations calling for Congress to enact reforms.

Following the report’s release, the National Association of Convenience Stores issued a statement calling the fees, which are assessed on a merchant every time a credit card is used as a payment, as "a cash cow for credit companies and banks" instead of the processing cost they claim it to be.

"[The GAO] found that the 10 largest banks have a stranglehold on this market, have used it to raise their fees, which all consumers pay, and that small businesses and low-income, cash-paying consumers get the worst deal from this arrangement," said Lyle Beckwith, NACS senior vice president of government relations.

He added that the GAO report "solidly debunks" claims from creditors such as Visa and MasterCard that swipe fees had not been increasing and that credit cards increased sales for merchants.

"The GAO report should sound the alarm that it is time for Congress to reform swipe fees," he added.

The National Retail Federation also issued a statement "welcoming" the report and hoped that its presence would lead to Congress passing legislation "to bring these fees and practices under control."

As merchants pay increasing amounts of swipe fees to creditor, they must raise their prices in order to maintain profits, making it tougher for those looking to consolidate debt to afford shopping at the retail locations.