Reducing credit card fees is difficult

According to The Wall Street Journal, proposals to cut interchange or swipe fees that total merchant services companies charge merchants would be challenging to implement, the Government Accountability Office (GAO) said in a report Thursday.

The GAO report said that even "consumers who do not use credit cards may be paying higher prices for goods and services, as merchants pass on their increasing card acceptance costs to all of their customers."

Today, interchange fees average about one percent to three percent of the purchase price. According to the article, some retailers see the interchange fees as a hidden tax on customers who end up paying higher prices after using credit card processing equipment because of retailers passing along the costs of the fees.

However, the Wall Street Journal reports that the American Bankers Association said this notion is incorrect. "Efforts by the merchant community to have the government interfere with the payment system amount to little more than retailers not wanting to pay their fair share and to have consumers bear this burden," said Kenneth Clayton, the association’s senior vice president and general counsel for card policy.

The fees — either processed in store or through a wireless credit card terminal — are a significant source of revenue for card issuers.