In the ongoing battle between credit card companies and merchants over increasing fees, the National Retail Federation had the opportunity to state its case last week in Congress.  Here is what NRF Senior Vice President and General Counsel Mallory Duncan had to say:

“There is an arms race to create cards with higher fees and more bells and whistles. The market checks that would normally exist to curb this escalation in fees are diminished because the card companies know that every merchant is required to take these expensive new cards or lose their ability to accept any cards.”

Duncan went on to point on the public’s ignorance of inflated fees for rewards cards. “Most consumers don’t know it, but every time they swipe a rewards card with its miles and concierge services, they are driving up the price of everything they buy even higher,” Duncan said.

The testimony was delivered to the House Financial Services Committee for a hearing of H.R. 2382,  also known as the Credit Card Interchange Act of 2009. The basic aim of this bill is to require credit card companies to fully disclose interchange fees and terms and conditions. The bill would also allow the Federal Trade Commission to investigate interchange in order to stop any practices hurting consumers. A benefit to merchants would be the option to give discounts for cash payment and even choosing which credit cards to accept.

Right now, merchants pay an average of 2% to Visa and Mastercard each time a customer’s credit card is swiped. However, this percentage is variable and can change according to which kind of card is swiped. The rule regarding accepting credit cards is an “Honor All Cards” rule, meaning many businesses are stuck paying higher fees in order to accept credit cards. For more information, check out this great article from WayTooHigh.com.