WASHINGTON – A bill being drafted in Congress would force credit card networks to negotiate new interchange rates with merchants.
The bill, called the Electronic Payment Systems Competition Restoration Act of 2008, would require card networks and merchants to reach a voluntary agreement on card interchange fees. If the two sides fail to reach a rate agreement, a three-judge panel appointed by the U.S. Department of Justice and the Federal Trade Commission would set the rates.
The issue of interchange fees, a $45 billion-a-year market, is a complicated one, with merchants paying fees on each transaction that generally are split between their card issuer, a credit union or bank, and card companies such as Visa and MasterCard.
Under the proposed legislation, merchants and payment companies would negotiate interchange rates based on the actual cost of processing transactions within "a normal rate of return.”
Drafting of the bill comes as the fight between merchants and card companies is heating up, with merchants continuing to chafe at the unilateral rate-setting by Visa and MasterCard. The fight also has held up resolution of data security legislation, which merchants want tied to the interchange fees issue.
