June 15, 2010
-
News: IL Politicians Supporting Small Business
The fiery debate currently underway among lawmakers regarding what retailers say are excessive and unfair credit card transaction fees has Illinois business speaking their mind. In a recent news conference, U.S. Senator Dick Durbin (D-IL) along with U.S. Representative Luis Gutierrez (D-IL) joined together to support restaurants, small businesses, charities and government agencies that are suffering because of the high credit card transaction fees. Durbin and Gutierrez both defended the businesses saying these fees are crippling and have driven some small merchants out of business and is threatening the same for many more. Credit card transaction fees are known as interchange fees. Major networks like Visa and MasterCard make the bulk of their earnings from these fees.
Jointly, Durbin and Gutierrez have proposed an amendment to the "Wall Street Reform Bill" which is currently being debated before Congress. The amendment would require the Federal Reserve Board to ensure that any debit interchange rates established by a card network would be "reasonable and proportional" to the processing cost. Merchants pay an average of one to three percent of the debit or credit card transaction amount as well as being assessed a monthly minimum fee. Card networks have gradually increased the fees in order to increase earnings and fill the pockets of stockholders. The politicians stated that merchants pay over $48 billion in debit and credit card transactions fees in 2008. A portion of the fee is paid to the merchant's bank and a portion is paid to the cardholder's bank; the remaining is paid to the card network.
Credit card interchange fees are also hurting Chicago's city government. Gutierrez stated that the city paid nearly $7.5 million during 2009 while the CTA paid an estimated $1.8 million in fees during that same time period. The U.S. House and Senate have already passed their own versions of the Wall Street Reform Bill. Negotiations are currently underway to reconcile a final version to be signed by the president. However, the amendment has only been included in the Senate's version of the bill.