The National Retail Federation expressed disappointment that a wide-ranging financial services reform bill unveiled today by Senate Banking Committee Chairman Christopher Dodd, D-CT, doesnt address the $48 billion in credit card swipe fees paid by merchants and their customers each year.

Chairman Dodds bill takes many steps to curb the excesses of the financial services industry, but the failure to address swipe fees is a glaring omission, NRF Senior Vice President and General Counsel Mallory Duncan said. These fees drive up prices for the average family by hundreds of dollars every year and depress the ability of main street merchants to thrive and grow.

Financial services reform isnt complete without swipe fee reform, Duncan said. Chairman Dodd has acknowledged the impact of these fees on consumers in the past, and we hope to see them addressed in the final version of this legislation.

Visa and MasterCard banks charge merchants a fee called interchange each time one of their cards is swiped to pay for a purchase. With the fee averaging about 2 percent, swipe fee collections totaled $48 billion in 2008, triple the $16 billion collected when NRF began tracking the fees in 2001. Visa and MasterCard rules effectively force merchants to pass the fees on to consumers by requiring them to be included in the advertised price of merchandise and making discounts for cash, checks or cheaper forms of plastic difficult. As a result, the average household paid an estimated $427 in higher prices in 2008, up from $159 in 2001.

Dodd included a provision in last years Credit CARD Act requiring the Government Accountability Office to conduct a study of interchange fees. The study concluded that credit card swipe fees have been increasing despite card industry claims that they have remained steady, that the fees drive up prices for consumers, and that consumers could see lower prices if they were reduced. Dodd has also said that he would consider legislation barring Visa and MasterCard placing restrictions on merchants ability to offer a discount for cheaper forms of payment such as cash, checks and debit cards.

Three major bills that would address swipe fees are pending in Congress. H.R. 2695, the Credit Card Fair Fee Act, sponsored by Judiciary Committee Chairman John Conyers, D-Mich., and Senate companion bill S. 1212, sponsored by Majority Whip Richard Durbin, D-Ill., would require Visa and MasterCard banks to negotiate with merchants over the fees rather than continuing to impose them on a unilateral basis. H.R. 2382, the Credit Card Interchange Act sponsored by Representative Peter Welch, D-Vt., would require increased transparency, give the Federal Trade Commission authority to prohibit interchange practices that violate consumer protection or anti-competition laws, and make cash discounts easier.