Capping Credit Card Fees Would Save US Merchants $15 Billion Per Year

It is has been suggested that capping credit card fees would save US retailers $15 billion annually if rules such as those currently regulating debit card charges were quickly introduced, according to a new report from CMS Payments Intelligence, an independent consultancy.

US credit card charges are currently considered the highest worldwide. CMSpi is looking to regulators to cap those fees in a similar style as debit cards follow the recent decision of a federal appeals court to dismiss the $7.25 billion proposed settlement between countless retailers and Visa and Mastercard.

The report suggests that the new credit card interchange cap should be set at 22 cwnts per transaction plus 30.5 basis points for covered issuers.

CMSpi CEO Brendan Doyle commented “While the federal appeals court ruling was positive, the uncomfortable fact remains that US merchants large and small are still paying excessive credit card interchange fees. Many other jurisdictions have regulated credit card interchange fees but the US has yet to do so, meaning that credit card interchange fees in the US average close to 2% of the transaction value and are currently among the highest in the world.”

“What regulators now need to do is to go a step further and regulate these fees too. Contrary to what card industry representatives believe, our analysis shows that this regulation framework would not threaten the existence of credit card issuers but would provide $15 billion of annual savings for merchants and consumers,” added Doyle.