credit card fee info

Several U.S. senators want Visa Inc and MasterCard Inc, the dominant electronic payment companies, to break down detailed costs associated with transactions called interchange fees, according to letters obtained by Reuters on Tuesday.

In letters to the two companies, the senators demanded information about methodologies and specific data used to establish interchange fees. The letters are dated May 23 and demand the information by June 3

The letters were signed by Democrats Richard Durbin of Illinois and Herb Kohl of Wisconsin and Republicans Olympia Snowe of Maine and Arlen Specter of Pennsylvania.

"It is important that Congress fully understands the costs and fees imposed within the credit and debit card systems so we can ensure that these systems will continue to function effectively for all participants," they said.

The U.S. credit card industry last year rang up $42 billion in interchange fees, which are incurred each time a consumer uses a credit card to buy a product.

In the transaction, typically, a merchant's bank pays the interchange fee, ranging between 1.6 percent and 2 percent of the purchase price, but the merchant pays it indirectly as a component of a larger set of fees charged by the bank.

Consumer groups, grocery and drug stores and other retailers are concerned that the payment card industry is setting higher non-negotiable fees for card transactions and the system lacks transparency.