Originally published July 5 2005
Businesses suing Visa and MasterCard for high fees
by Mike Adams, the Health Ranger, NaturalNews Editor
Businesses in three states have begun a legal fight against Visa, MasterCard and several of the nation's major banks, claiming the institutions illegally set fees too high.
Businesses in three states have begun a legal fight against credit-card giants Visa and MasterCard and several of the nation's major banks, claiming the financial institutions illegally set exorbitant fees.
The lawsuit, filed Wednesday in a Connecticut federal court, seeks class-action status to cover millions of retail businesses across the country that accept Visa and MasterCard as payment.
The outcome could eventually affect consumers, who typically end up paying more for their purchases to cover the fees.
''In the last couple of years we've just seen an explosive increase in the cost we're being charged for accepting cards.
It's very frustrating,'' said Michael Schumann, co-owner of Traditions Classic Home Furnishings in St. Paul and part of the suit.
Under the current rates, Traditions could end up paying an interchange fee of about $15 on the sale of an $800 couch.
CHS declined to comment on the suit.
Now merchants are targeting the more than $20 billion in so-called ''interchange fees'' they pay to card-issuing banks for each Visa and MasterCard transaction.
''This is a very, very important case,'' said Mallory Duncan, senior vice president and general counsel for the National Retail Federation.
''This current effort to undermine the interchange system must be understood for what it is: a clear attempt by merchants to receive all the value of electronic payments while shifting their normal costs of doing business onto consumers,'' Visa USA Vice President Paul Cohen said in a statement.
The interchange fee -- one of several fees merchants pay -- is based on the type of business, the size of the transaction, the type of card used and whether the credit-card number is keyed in or swiped.
Banks say they charge the fee to cover the cost of their networks and the risk of fraud.
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