Congress Eyes Cards Interchange
Congress announced plans to step into the cards interchange wars with hearings on credit card interchange rates. Retailers have filed more than 40 lawsuits against card giants MasterCard and Visa, claiming the two dominant players illegally conspire to set the rates on transactions.
The market has grown exponentially with the decline of paper checks and is estimated at as much as $30 billion a year, with 75% of those interchange fees going to one of the two card giants.
Credit unions and other small players in the market have become pawns in the battle of giants, with MasterCard cutting discount deals with the big banks that control it, and huge retailers, like Wal-Mart cutting their own discount deals.
The Senate Judiciary Committee has scheduled a hearing on the issue for June 28. At least one senator, Democrat Christopher Dodd of Connecticut, said the Congress or the Federal Reserve should consider federal regulation for the market for interchange, as other countries like Australia and Canada, have done recently. MasterCard and Visa dominate the markets in both of those countries, too.