October 23, 2009
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Back-Burner Interchange Fees Still Causing Heat, Pt.2
Down to specifics.Again, the interchange riff is not a new problem. The reason it keeps re-surfacing as of recent is the hope of the oppressed merchants to share in the protective credit card reforms that the consumers are getting in Congress. The connection here for wider credit card reform has proven illusive. It seems that no one in Congress is willing to make a strong stand to represent the merchants. The millions of dollars spent on lobbyists have not made any ground toward merchant's rights for interchange negotiations nor any other credit card reform on their end.
Some of the dictatorial rules handed down to merchants are:
<(X)> Merchants must not charge different prices between credit cards and cash (though many do anyway).
<(X)> Merchants must accept all types of credit cards bundled into the only contract they're offered (again, interchange rates vary between card-types).
<(X)> Merchants are not allowed to pick and choose which items can be charged on a credit card and which may only be purchases with cash. This sets up a situation when merchant's are actually forced to lose money on certain sales.
<(X)> Merchants are not allowed to place minimum nor maximum price constraints on credit card purchases.
<(X)> Merchants may not pass interchange fees onto the consumer by way is higher prices (if they must charge more to cover fees, they must also charge more for cash purchases. This gives a competitive edge to merchants who don't accept credit cards at all.)
These anti-trust issues are not just about fairness. For many retailers, they carry the balance of the survival of their outlet. Only the week before last (Oct. 8), the House Financial Services Committee did give ear to the plight of some of the retailers. These issues are now being studied by various congressmen and committees.