An interchange fee is set by financial institutions or credit card associations and is the percentage of a sale that is charged to a merchant each time a customer uses a credit card. This percentage, as well as a small fee charged by the acquiring bank, is deducted from the amount it pays to the merchant’s bank. The fees differ, based on the structure of the account. If cash is withdrawn at an ATM, the fees are paid by the bank that issued the card, rather than a merchant. The fee structure has several variables that contribute to their monthly totals. An Interchange fee is based on transaction components such as the credit card brand, type of card, size of the merchant accepting the card for payment and the type of transaction. The amount of these fees is very controversial. Regulators, merchants and various coalitions have filed grievances, brought lawsuits and have sought many ways to reduce these fees. The lower cost of technology and the disparate differences between the fees charged in the United States versus other countries have been used as a basis for the reduction of fees. In March of 2008, the Credit Card Fair Fee Act was introduced. The goal of the legislation was to require financial institutions to negotiate with merchants and retailers on terms for interchange fees paid. The basis was that it would encourage competition between vendors in the credit card processing system. Another bill was introduced in June 2009. It was similar to the bill introduced the previous year. It focused on passing the cost of doing business to the consumer, rather than on the financial sector. It was referred to the House Financial Services committee in October, 2009. Rulings and information from committees such as this are notoriously vague and timelines for a decision are fluid. While the results of the committee’s findings may take months, or even years to be released, the interchange fee will continue to exist. There are many web sites that provide the opportunity for consumers to voice their opinions, read articles about the House committee’s findings and to sign electronic petitions in an effort to lower existing fees. The primary point of frustration for consumers and merchants alike is that these fees, unlike interest rates or ATM fees, are hidden. Contact National Processing if you would like to know more about merchant accounts and how to manage the fees.