News Room

FMI Praises California Banking Committee for Investigating Credit Card Swipe Fee Abuses; Calls for Reforms to Increase Transparency and Empower Retailers to Negotiate Fees

January 26, 2010
ARLINGTON, VA – January 26, 2010 – The Food Marketing Institute (FMI) commended the California Assembly Banking & Finance Committee and its Chairman Pedro Nava (D) for investigating credit card interchange or “swipe” fees – hidden charges added to every plastic transaction that cost Californians nearly $5 billion a year and all Americans more than $48 billion.

“Reforms are needed to create a transparent process for businesses to negotiate rates and enhance public awareness of interchange fees, which continue to increase,” testified FMI Director of Government Relations Liz Garner before the committee yesterday.

“Card companies and banks collect an interchange fee averaging about 2 percent on every credit and debit card transaction, and can raise the rates at any time by any amount,” she said. In fact, the total cost of interchange tripled since the beginning of the decade due to increases in the fees and card use.
She described legislation pending in the U.S. Congress that would address these issues:


  • The Credit Card Fair Fee Act, introduced in the House (H.R. 2695) and Senate (S. 1212), empowers retailers to negotiate fees with card companies and banks.
  • The Credit Card Interchange Fees Act (H.R. 2382) requires disclosure of transaction fees and card acceptance rules. It would not allow rules that might foster competition in the marketplace such as allowing retailers to give discounts to customers who pay with debit or credit cards that carry low fees. Other rules prevent retailers from promoting discounts for paying with cash.

As a result, all customers bear the cost of interchange, whether they pay with plastic, checks, cash or food stamps.

The purpose of the California hearing is to gather facts about interchange issues and explore steps the state legislature can take to help resolve them.

Food Marketing Institute (FMI) conducts programs in public affairs, food safety, research, education and industry relations on behalf of its nearly 1,250 food retail and wholesale member companies in the United States and around the world. FMI’s U.S. members operate more than 25,000 retail food stores and almost 22,000 pharmacies with a combined annual sales volume of nearly $650 billion.  FMI’s retail membership is composed of large multi-store chains, regional firms and independent operators. Its international membership includes 126 companies from more than 65 countries. FMI’s nearly 330 associate members include the supplier partners of its retail and wholesale members. 

###