PURCHASE, N.Y., May 15 /PRNewswire/ -- MasterCard Worldwide said today it
is pleased that the Government Accountability Office (GAO) report examining
interchange fees recognized the benefits the federal government receives from
both payment card usage and acceptance. MasterCard urges Members of Congress
to review the report before taking action to regulate interchange fees, which
would have a negative impact on consumers, small financial institutions, and
ultimately merchants.
The GAO report concludes that the federal government realizes benefits
from card usage including the ability to make purchases more quickly and with
lower administrative costs than with its previous purchasing methods. For
example, report notes that the General Services Administration estimates a
total administrative cost savings of $1.7 billion in fiscal year 2006 alone
due to the use of payment cards. The report also points out that through the
GSA SmartPay(R) program, the government received rebates on purchases of
approximately $175 million in 2007, and that using cards provides government
agencies with enhanced data on purchasing trends, which can be used to
negotiate better prices from vendors.
Moreover, the GAO says that where the government accepts cards in its role
as a merchant, it benefits by creating more satisfied customers, reducing bad
checks and cash thefts, and improving operational efficiencies. Consumers use
their credit and debit cards to make payments to federal, state, and local
governments for such things as income taxes, park admissions fees, drivers and
other licenses, or paying parking fines.
In addition to concluding that the federal government has derived enormous
benefit from card usage and acceptance, the GAO report refutes some merchants'
assertion that interchange regulation in foreign countries has been
pro-consumer by confirming that "no conclusive evidence exists that lower
interchange fees led merchants to reduce retail prices for goods; further,
some costs for card users, such as annual and other fees, have increased."
MasterCard also noted that interchange regulation would mean small
financial institutions, including community banks and credit unions, would
find it harder to provide payment card services to their customers and
members. Ultimately, we believe that fewer payment cards issued would mean
lower sales for merchants.
Members of Congress who have introduced legislation to impose price
controls on merchant discount fees in the U.S., should note the GAO's
conclusion concerning the negative consumer impact similar regulation has had
on consumers in Australia.
Contacts:
Sharon Gamsin, MasterCard Worldwide, 914-249-5622, sgamsin@mastercard.com
Eric Hoffman, Weber Shandwick, 202-585-2808, ehoffman@webershandwick.com
SOURCE MasterCard Worldwide
