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WASHINGTON -- A step was taken to rein in interchange fees assessed by credit card companies last week, as House Judiciary Chairman John Conyers (D-Mich.) and Congressman Chris Cannon (R-Utah) introduced the Credit Card Fair Fee Act (HR 5546). Retailer groups -- including the Food Marketing Institute (FMI), the Merchants Payments Coalition (MPC) and the National Grocers Association (NGA) -- praised the measure.
"This law would restore fairness and reason to an anti-competitive, anti-consumer and broken electronic payments system," FMI president and CEO Tim Hammonds said in a statement.
The newly introduced bill does not set prices, rather it would require that credit card fees, including interchange, are set in a transparent manner in an effort to encourage companies to compete for business and preventing consumers from paying artificially high rates, Cannon said in a statement on his Web site.
"In the end, credit card companies should set whatever fees the market will tolerate," Cannon added. "This bill is a win for consumers, for retailers and for the credit card industry which will benefit from competition."
The legislation would require a committee of merchant, card company and bank representatives to negotiate uniform fees for debit and credit card transactions, according to the Food Marketing Institute (FMI). If the negotiators can not reach an agreement, the decision would move to binding arbitration by a panel of experts, the FMI stated. Fees would remain in effect for three-year periods and could be renegotiated at the end of each period if costs and market conditions change, the organization stated.
"This legislation would use the nation's antitrust laws to rein in the greed of the credit card companies," Mallory Duncan, chairman of the MPC and senior vice president and general counsel of the National Retail Federation (NRF), said in a statement. "The introduction of this legislation marks the beginning of the end of credit card company rip-offs."
In July 2007, the House Judiciary Antitrust Task Force Subcommittee conducted a hearing to investigate competition in the credit card marketplace, and the Credit Card Fair Fee Act is a direct result of the task force's examination, according to the MPC.
"Whether you are a small or large retailer, today's credit and debit card interchange fee system is a broken one that is discriminatory and lacks transparency," Mike Jackson, NGA chairman of the board and president and COO of Supervalu Inc., said in a statement. "Retailers of all size support a market based solution that would give merchants a seat at the table to negotiate fair fees for the benefit all consumers."
An opponent of the measure, the Electronic Payments Coalition (EPC), accused the MPC of trying to lessen their costs through the legislation and stated the legislation replaced a free marketplace with "a price control scheme governed by three unelected 'electronic payment judges' -- under control of the federal government."
"Let's be clear -- consumers will see no economic benefit from such price control legislation," the EPC said in a statement. "This legislation is a thinly veiled attempt by members of the Merchants Payments Coalition to lessen their own costs of doing business. We understand that every business wants to find ways to cut overhead costs for valued services. But government intervention in a system that is clearly working well for all parties in the marketplace would be counterproductive and ultimately harmful for all involved."
The bill is a start towards transparency, Cannon said. "This is a complicated issue. This bill may not be the final answer, but society's interest in this is so great that we hope all interested parties will come to the table," he said.
Bi-partisan co-sponsors of the Credit Card Fair Fee Act include: Representatives John Boozman (R- Ark.), William Delahunt (D-Mass.), Louie Gohmert (R-Texas), Ralph Hall (R-Texas), Zoe Lofgren (D-Calif.), John Peterson (R-Pa.), Todd Platts (R-Pa.), Bill Shuster (R-Pa.), John Sullivan (R-Okal.), Anthony Weiner (D-N.Y.) and Peter Welch (D-Vt.) and Joe Wilson (R-S.C.), according to the MPC.