Escalating Interchange Fees Stifle Retail Job Growth 

Meaningful reform of unfair interchange fees could reverse the trend of retail job, losses said the Retail Industry Leaders Association (RILA).

Unemployment data release today by the U.S. Bureau of Labor Statistics reported 14,500 retail job losses in November, bringing the total retail jobs lost in 2009 to 410,000.

“Retail job creation is stifled in part by the rapidly escalating costs associated with credit card interchange ‘swipe’ fees,” said John Emling, senior vice president of government affairs. “Every additional dollar taken by banks through these excessive fees is a dollar unavailable to hire new employees and lower costs for customers.”

Interchange fees are imposed by credit card companies and issuing banks under the pretense of processing credit and debit card transactions.  However, these fees have tripled in the United States since 2001, to $48 billion in 2008, despite advances in technology that have reduced other comparable transactional costs.  Today, for most retailers, the cost of processing paper checks is less than the cost of accepting credit and debit cards.

A Government Accountability Office (GAO) Report release last month was critical of interchange rate setting.

According to the report “Although issuers incur costs for offering cards, concerns remain about the extent to which interchange fee levels closely relate to the level of card program expenses or whether they are set high so as to increase issuer profits.”  GAO Report 10-45, Credit Cards, 11/19/09, p. 2)

“Lawmakers committed to job creation should take note of today’s report and give retailers, small and large, relief from these unfair practices,” concluded Emling.

The Retail Industry Leaders Association is the trade association of the world’s largest and most innovative retail companies.  RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs and operate more than 100,000 stores, manufacturing facilities and distribution centers domestically and abroad.