MasterCard and Visa made $30.7 Billion in 2005 by charging traders a percentage of each transaction by credit card. According to the estimates by the National Retail Federation (NRF), these earnings will spike to $40 Billion by 2006. The retail industry is now joining hands with politicians to talk about restrictions on the credit card companies.
The fee that varies with each transaction and is different for different trader is taking the operating costs for many small players up. For example, as per the NRF, gas stations pay 7-9 cents as fees on each gallon of fuel sold.
The Senior Vice President, Government Relations, NRF, Steve Pfister, reported that US charges the highest interchange fee in the world and this would remain the top issue of the Federation to deal with the 110th Congress.
The Sun News reported Pfister saying that the NRF has demanded enhanced transparency on the fees charged by the credit card companies in future.
NRF is not alone in this movement. A lot more consumer groups are stressing the need of same kind of amendatory action against credit card companies. The Merchants Payment Coalition (MPC) is also supporting this movement and is suggesting taking a “deeper look” into the matter. According to MPC, the interchange fees cost the consumers around $30 Billion annually. This amount, they state, is almost double the amount charged by the credit card industry as late fees.
According to a Research Analyst at RNCOS who has recently researched a report on “U.S. Convenience Stores: A Market Analysis”, fees of credit card cost a convenience store (c-store) about 2.5-3% of the transaction made up of many components, like PIN-based debit transaction. A credit transaction can cost convenience stores more than other channels and it’s a matter of matter of concern for c-stores.
The RNCOS report also discusses the issues and facts critical to business success, like:
- Market size of the US retail store industry
- State-wise growth of convenience stores
- Growth driving factors
- Technologies that can help convenience store markets to improve their operations
- Role of these technologies in increasing the operational efficiency
- Major players, and their presence and strategies
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