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WASHINGTON -- Republican Senator Christopher Bond (R-Mo.), buoyed the National Retail Federation (NRF) today by co-sponsoring the Credit Card Fair Fee Act of 2008, a move that sends a clear message that both political parties are troubled by hidden fees that cost the average family an estimated $427 a year.
"The addition of Senator Bond to this bill underscores the bipartisan support for fixing this problem," NRF senior vice president and general counsel Mallory Duncan said in a released statement. "Protecting retailers and their customers from the greed of credit card companies is an issue that crosses party lines. Congress is hearing more and more often from their constituents that it's time to do something about a fee that gives a windfall profit to the credit card industry at a time when the average American is struggling to pay for groceries and to fill the tank."
Among constituents is West Virginia gas station manager Roger Randolph, who recently realized it was costing him money each time someone filled up with $4 per gallon gas. He hung a sign on his pumps: "No more credit cards."
"The more they buy, the more we lose," Randolph, who manages Mr. Ed's Chevron in St. Albans, told The Associated Press. "Gas prices go up, and our profits go down."
Bond became the lead co-sponsor of S. 3086, which was introduced two weeks ago by Senator Richard J. Durbin (D-Ill.) The legislation is a companion measure to H.R. 5546, also named the Credit Card Fair Fee Act of 2008. The bill has a total of 37 other co-sponsors, including 21 Democrats and 16 Republicans.
At issue is credit card interchange, a non-negotiable fee averaging close to two percent that Visa and MasterCard banks charge merchants every time a credit card or signature debit card is used to pay for a transaction, explained Duncan.
The major credit card companies claim fees facilities secure transactions and support operational costs. MasterCard has capped interchange fees for gas purchases of $50 or more, company spokeswoman Sharon Gamsin told the AP. Accepting MasterCard also gives gas stations "increased sales, greater security and convenience, lower labor costs, and speed for their customers at the pump," Gamsin said in an e-mail to the AP.
According to NRF estimates, the average U.S. family will pay $427 in hidden credit card interchange fees in 2008, up from $378 in 2007. The amount has nearly tripled from the $159 paid in 2001, the year NRF began tracking interchange. Total interchange collections are projected at $48 billion this year, up from $42 billion last year and $16.6 billion in 2001.
According to Duncan, both the House and Senate measures would require credit card systems possessing "substantial market power" to negotiate with merchants to reach a voluntary agreement on credit card terms and conditions. If an agreement could not be reached, both sides would be required to submit their final offers to binding arbitration by a panel of antitrust experts appointed by the Department of Justice and Federal Trade Commission.