Interchange fees are not paid by consumers. In choosing to accept debit and credit cards, retailers receive more sales, greater fraud protections, and faster payment. Some retailers would lead you to believe that they should not pay for these benefits. They don’t want you to know that the cost of offering electronic payments is part of the cost of doing business. Consumers understand that retailers factor all of their costs into their prices. The price of an item is the same to consumers whether they use a credit card, debit card, cash, or check. Retailers are also free to offer discounts for cash, but few actually choose to do so. Attempts to classify such fees as a “hidden tax” on consumers would be similar to trying to misrepresent businesses’ rent or salaries for employees as a “hidden tax” on their customers.

Electronic payments help retailers. Retailers see more sales, greater fraud protections, and faster payment when customers use electronic payment cards. In fact, using the technology offers huge savings and adds to the bottom line of small and large businesses alike. Benefiting from flexible terms and ease of use, small businesses manage monthly expenses, track purchases, and weather short-term fluctuations in cash flow. This technology also levels the playing field, encourages entrepreneurship, and allows smaller retailers to compete with larger businesses.

Visa and MasterCard make their interchange rates publicly available. Moreover, retailers know what percentage they are being charged by their banks for electronic payment transactions.

If retailers don’t want to pay fees associated with offering electronic payments, they have several options: they can provide discounts to those who pay with cash, negotiate a different merchant discount rate with their bank, choose among competing networks for electronic payments services, or accept only cash and checks.

On a daily basis, card payment systems compete with each other, with cash and checks, and with other new forms of payment such as PayPal, Debitman, and Google Checkout. For years, competition has rewarded consumers with greater access, lower costs, and more choices while expanding business opportunities for retailers.