July 27, 2009
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News: Dem's and Rep's Join in CC Fair Fee Act
While Republicans, Democrats, retailers, and credit card companies have been fighting over the future of interchange fee negotiations, credit unions have been taking this opportunity to tout their cards to consumers as being better . However, a showing of unity was apparent today when House Judiciary Chairman John Conyers (D-MI) and Representative Bill Shuster (R-PA) jointly introduced the Credit Card Fair Fee Act of 2009. The Act is aimed at providing retailers a fair environment and right to participate in the negotiations of interchange fees. Currently, the banks and major credit card networks conduct the negotiations behind closed doors where retailers are not allowed. Interchange fees are the fees the customer's bank and the merchant's bank pay card networks each time a consumer swipes his card. Merchant's say the fees are the second highest charge on their balance sheet and amounts to approximately $48 billion a year.
According to Conyers, the legislation will "level the playing field" and give merchants an opportunity to play a role in how the credit card interchange fees are determined. If passed, the new legislation would not regulate the negotiations, but merely mandate that merchants be given a seat at the table. Lower interchange fees would also mean lower costs to consumers since a large portion of the fee filters down to the credit card customer. Furthermore, the legislation could also benefit electronic transactions including vending and amusement machines that currently are not profitable enough to warrant paying an additional transaction fee.
Despite the unity between Conyers and Shuster, there is still a great deal of opposition. The Electronic Payments Coalition boast on their website that retailer just "don't want to pay their fair share." Efforts to pass this type of legislation have failed in the past because of successful lobbying against it. However, supporters say that credit card interchange fees have increased by over 180% since 2001 and eating up most of the small retailers' profits.