Irvine merchant Mitch Goldstone, the lead plaintiff in the suit filed by Wildfang, joined the litigation two years ago after boosting prices to offset the rising toll of interchange fees at his photo business, 30 Minute Photos Etc. He said credit card companies "don't want to have to compete by lowering prices."
Goldstone said he resents that people who pay by cash or check are paying higher prices to help offset interchange fees.
"It's not fair for the single mom who goes to a convenience store in the inner city and pays cash," Goldstone said.
Credit card executives say merchants can always choose to stop accepting their cards -- Bentz, the Visa executive, noted that the deli in her company's headquarters in San Francisco didn't accept Visa.
But Warren, the Harvard Law professor, said most small businesses, especially online merchants such as Goldstone, rely on electronic payments and would hurt their businesses if they decided to not accept credit cards.
"They see themselves as trapped: If they tell their customers no, they may lose them, but if they take it, they lose 2% to 3% on a sale" if they don't mark up prices.
Noting that this creates a dilemma, especially for small businesses that operate on small profit margins, Warren added, "The merchants who are hit the hardest have almost no leverage with the credit card companies."
Merchants and consumer advocates hope the increased attention from Congress will be enough to get credit card companies to lower or cap their fees.
After Congress began focusing on the fees last fall, Visa and MasterCard posted them online. This year, MasterCard agreed to limit interchange fees on gasoline purchases to the first $50, and Visa agreed to lower fee rates for some purchases of $25 or less.
"For too long this industry has gotten the message from Congress and regulators that they can charge what the market will bear even if those charges strike consumers, merchants or cardholders as unfair, deceptive and unnecessary," said Travis Plunkett, legislative director of the Consumer Federation of America. "Now we're starting to see some credit card companies unilaterally change their policies."
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molly.hennessy-fiske@latimes.com
