April 3,2009
-
News: Interchange Fees; Merchants Fight Back.
Small-business merchants have ‘had it up to here' with high credit card Interchange Fees and are now taking it to the streets. They've formed a coalition and have started a campaign to voice their plight to Congress. Called "The Merchants Payment Coalition", they have launched an advertising campaign. The target audiences are congressional districts where there are found, many junior members of the House Financial Services Committee. Their hope is to raise public awareness about exorbitant credit card interchange fees imposed on merchants and their lack of rights to negotiate with the credit card industry.
The attraction for Congress at a time of reviewing unfair practices by the credit card industry and protection for consumers, is that these fees must be passed on to those consumers Congress is trying to protect. So, the coalition is vying for negotiation rights, where they have some voice in the fee rates and how they're to be imposed. They have so little say in the matter, they say, that the fees for just last year amounted to a colossal $42 billion. This expense had to be passed on to the unrepresented credit card consumers. Over just the last few years, the percentage fee rates has skyrocketed a phenomenal 400%.
This is not a new fight but it is a growing one. An attempt was made last year and actually made it past a House committee. Eventually, however, the bill stalled and never made it to completion. This year, however, Senator Dodd and Rep. Maloney are driving hard and making ground on their credit card consumer protection packages in both the House and Senate. The ‘interchange fee‘ provision has not been included in these proceedings yet and it is the hope of the coalition that it be represented.
Of course, the credit card industry is adamantly opposed to this move. They justify that having this much control is necessary in order to set up and maintain the necessary infrastructure. The point that the coalition is trying to get across to Congress at this time is that, no matter how much good the reforms gain in consumer rights on the one hand, if they don't patch up this loophole, the abuses will still be imposed on those consumers by the passed-on interchange fees.