October 07, 2009
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Americans Pay The Highest Interchange Fees Worldwide, Pt.2
Nullifying the mythThe Unfair Credit Card Fee report indicates that Americans pay nearly 60% of all transaction fees accessed worldwide. The average credit card interchange fee percentage rate for Americans is 2 percent; more than double that of the United Kingdom, quadruple the amount Australia pays, and more than 600% than that of the European Union. According to the report, Mexico, Germany, and Canada are not far behind the U.S.; Mexico pays an average fee of 1.66% while Germany and Canada pay 1.5% of each credit card transaction. The numbers are clear; something has gone very wrong in the U.S. and Americans want to know why.
The reported numbers nullify the myth that doing business in the United States is the right thing to do. A major question would be what have other countries done differently that have enabled them to keep credit card transaction fees under control. How is it that the big credit card networks like Visa and MasterCard have not been able to take advantage of countries like Australia, New Zealand, and the European Union? To begin with, lawmakers in countries like Australia and New Zealand have taken the steps to fight back by implementing interchange reform. These countries have experienced positive rewards in economic recovery.
What can Americans gain from credit card transaction fee reform? First and foremost, it would quickly provide a boost to the economy. It would leave more money in the pockets of both the end consumer as well as the merchant. More money in the pocket means more money to dump back into the economy. Allowing merchants to be a part of interchange fee negotiations would provide a more competitive market and a democratic process by which the United States stands on. Taking a look at how successful countries have handled interchange fees provides a standard by which Americans could learn by. Australia is a good place to start.