Small Business News 

For Immediate Release                                            

 SBE Council on GAO's Interchange Fees Report  

Report Cites Many Positives for Small Business 

Oakton, VA - In light of a new report from the U.S. Government Accountability Office on credit card interchange fees, the Small Business & Entrepreneurship Council (SBE Council) urged Congress to carefully consider the negative fallout for small businesses and their customers of any new regulations or interference in this competitive market. 

SBE Council President & CEO Karen Kerrigan said: "The GAO analysis took note of the benefits that credit cards offer to merchants, especially small merchants. Those include increased sales; reduced costs compared with running their own credit programs; receiving quicker and more certain payments; and lower labor costs. In addition, the GAO reported that merchants of all sizes noted that competitors in the credit card business were vying for their business, which led to negotiating lower costs." 

The report also highlighted that smaller financial institutions, such as banks and credit unions, rely on interchange fees to cover the expenses for credit card programs, allowing them to compete with larger institutions.  

The many benefits for credit card holders were noted, including convenience, faster transactions, a source of unsecured credit, theft and loss protection, and easy record keeping. And competition in the credit card market has provided consumers with cards that have no annual fees, lower interest rates compared to past years, and more rewards, according to the GAO. 

SBE Council chief economist Raymond J. Keating observed: "The benefits for small businesses and their customers by having credit cards as an option in the payment marketplace are clear. Equally clear is that government action to try to regulate or set interchange fees threatens to reduce or eliminate many of these benefits. As the GAO noted, consumers could face reduced card benefits and/or increased card costs. And while the push for interchange price controls in the courts or through legislation often is billed as ultimately helping consumers, it is unclear, to say the least, that consumers would garner any savings. For example, there is no clear evidence that consumers benefited when Australia moved to reduce interchange fees, again as noted in the GAO report." 

Kerrigan concluded: "In the end, the evidence is clear that the current credit card industry structure is benefiting small businesses and their customers. Government interference in this competitive market can only raise costs and reduce options." 

SBE Council can be contacted at 703-242-5840. The SBE Council is a nonpartisan, nonprofit small business advocacy group that works to protect small business and promote entrepreneurship.

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