GAO Reports on Effects of Interchange Fees

This story appeared in Bank Digest.

Merchant costs for accepting credit cards have increased as consumers have used cards more often, according to a GAO Merchant costs for accepting credit cards have increased as consumers have used cards more often, according to a GAO report required by the 2009 Credit Card Accountability, Responsibility, and Disclosure Act. The agency attributed some of that increase to how Visa and MasterCard have competed for card issuers by increasing the number of interchange fee categories and the level of these fees. For some issuers, such as community banks, these fees generate significant revenue, and they also have been among large banks' most profitable activities. The report considers four options for reducing such fees but notes that implementation problems exist for each.