June 4, 2009
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News: CC Fair Fee Act Stirs the Pot
Congressman John Conyers (D-MI) and Representative Bill Shuster (R-PA) have partnered to introduce new legislation tagged Credit Card Fair Fee Act. The act is aimed at addressing the massive amounts of interchange fees that are paid by merchants for each debit and credit card transaction. Although the merchant pays the fee, ultimately they are built into the price of the product thereby passing the expense onto consumers. A coalition representing various organizations including payment card networks and financial services trade associations strongly opposes the act. The Electronic Payments Coalition says that the proposed legislation will not protect consumers, but is really aimed at giving large retailers a shield to pass their business expenses on to consumers. According to the coalition, "merchants do not want to pay their fair share to accept debit and credit cards, and want consumers to foot the bill."
Visa and MasterCard credit card interchange fees to banks and lenders. Banks pass these fees onto the merchants who then pass them onto the end consumer. These interchange fees cost Americans over $48 billion a year. Over $48 billion of business expenses that companies do not want to pay for themselves. While the Association for Convenience and Petroleum Retailing (NACS) maintain that the financial industry wants them to pay it all. However, the financial industry defend their position by saying that merchants benefit from debit and credit card sales and should, therefore, pay their share of the expense. The NACS says that Visa and MasterCharge control over 73% of the U.S. card industry and set interchange fees in private without the inclusion of outside interested parties. They support the new legislation that will give merchants the right to sit in on these meetings and give them a say in fee setting.
The Electronics Payments Coalition strongly opposes the Credit Card Fair Fee Act and view it as harmful. The financial industry will continue to fight against any further credit card reform and the NACS applauds the Act. Representative Shuster believes the Act will give merchants, consumers, and small businesses the right to be heard and assist them in saving money.