Interchange fee
[22] Some countries, such as Australia, have established significantly lower interchange fees, although according to a U.S. Government Accountability Office study, the savings enjoyed by merchants were not passed along to consumers.
Regulators in several countries have questioned the collective determination of interchange rates and fees as potential examples of price-fixing.
A 2010 public policy study conducted by the Federal Reserve concluded the reward program aspect of interchange fees results in a non-trivial monetary transfer from low-income to high-income households.
[26] Because swipe fees are hidden, consumers are unable to weigh the benefits and costs associated with choosing a particular form of payment.
Eliminating hidden swipe fees is advocated as a means to realize an open market system for electronic payments.
The suit was filed due to price fixing and other allegedly anti-competitive trade practices in the credit card industry.
[28] The settlement reduces interchange fees for merchants and also protects credit card companies from lawsuits over the issue in the future again.
[29] Senate hearings in the United States have focused on the secrecy surrounding interchange fee schedules and card operating rules.
The Wall Street Journal reported[31] that the document outlining the shift "makes it difficult to determine if the new rates, on average, are rising."
MasterCard spokesman Joshua Peirez said the new structure "allows us to have a more sophisticated way to break up our credit card portfolio," while National Retail Federation general counsel Mallory Duncan said, "They are pricing each tier at the absolute most they can so they can maximize their income."
On July 19, 2007 the House Judiciary Committee antitrust task force held the first hearing to study the specific issue of interchange fees.
Subcommittee chairman John Conyers, leading the panel, said, "While I come into the hearing with an open mind, I do believe the burden of the proof lies with the credit card companies to reassure Congress that increasing interchange fees are not harming merchants and ultimately consumers.
"[32] On October 1, 2010, the Durbin Amendment came into effect as a last minute addition to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
As a result, banks have begun to limit the incentives offered with their checking account products, and some have announced that they would begin to charge their customers a fee for the use of the cards.
[33] In the same month, Visa and MasterCard reached a settlement with the U.S. Justice Department in an antitrust case focused on the issue of competitiveness in the interchange market.
[34] In 2002 the European Commission exempted Visa's multilateral interchange fees from Article 81 of the EC Treaty that prohibits anti-competitive arrangements.
Upon publishing the report, Commissioner Neelie Kroes said the "present level of interchange fees in many of the schemes we have examined does not seem justified."
[38] The antitrust authorities of EU member states other than the United Kingdom are also investigating MasterCard's and Visa's interchange fees.
[42] In 2006, the New Zealand Commerce Commission issued proceedings against Visa and MasterCard, alleging that interchange fees constitute price fixing and result in a substantial lessening of competition.
[43] Shortly before the court case was due to start in Autumn 2009, the suit was settled out of court; the "no surcharge rule" was prohibited, allowing retailers to pass on the cost of MasterCard and Visa transactions to the customer, and card issuers were allowed to set their own interchange fees, within a maximum limit set by Visa or MasterCard.
