Both merchants and bankers are serving their own interests in encouraging or opposing any legislation providing more transparency on interchange fees.
When merchants accept credit cards, people spend more than if they pay for their purchases with cash (a fact backed up by a number of academic studies).
Lenders fear that if outrage over the fees grows, Congress and the president may roll back the interchange fees or put a cap on them.
The GAO issued a report last year on the impact of interchange fees on the federal government. Consumers increasingly use credit and debit cards to make payments to federal, state, and local governments for such things as park admission fees, driver's licenses and income taxes. The investigative arm of Congress found that by accepting credit cards for payments, federal agencies realized some significant benefits despite having to pay interchange fees. The benefits included fewer bad checks and cash thefts.
The GAO also said that when it examined data from other countries where authorities have successfully rolled back interchange fees to less than 1 percent of transactions, consumers didn't necessarily reap the benefits.
"No conclusive evidence exists that lower interchange fees led merchants to reduce retail prices for goods," the GAO reported. "Further, some costs for card users, such as annual and other fees, have increased."
The GAO is supposed to report its findings to Congress in six months, along with any recommendations for legislation. The agency is charged with examining whether merchants are restricted from revealing the fees to customers and to what extent merchants are permitted to discount for cash purchases. It will investigate the ability of merchants of varying sizes to negotiate interchange fees and exactly what costs are incorporated into the fees.
Given the credit card industry's history of unfair and predatory practices, the GAO study is a good idea.
One could argue that merchants should disclose how much of a product or service is marked up because of a credit or debit transaction. But I wonder, even if more consumers knew about these fees and were given the widespread option of paying less for their purchases if they used cash, would they part with their plastic?
I don't think so.