WASHINGTON – A bill introduced in the Senate would give retailers immunity from antitrust laws to allow them to negotiate bilateral agreements with credit card companies on interchange fees, setting up a federal panel to oversee the negotiating process.
The bill, similar to one moving through the House, is aimed at reigning in growing fees on all credit and debit card transactions, which grew to approximately $42 billion last year, according to Sen. Richard Durbin, an Illinois Democrat who sponsored the legislation.
Durbin said the bill would allow merchants to negotiate their own fees, instead of having the fees set by MasterCard and Visa, which control an estimated 80% of the cards market. "There is no meaningful competition or negotiation involved in the setting of interchange fees," Durbin said in a statement to announce his "Credit Card Fair Fee Act of 2008."
Credit unions, which earned an estimated $3 billion in interchange fees last year, oppose the effort, saying the proposals in the House and Senate amount to regulating interchange fees. “This legislation would be harmful to credit unions, so we’re going to have to oppose it,” Ryan Donovan, senior lobbyist for CUNA, told The Credit Union Journal yesterday.
CUNA and NAFCU have joined the bankers and MasterCard and Visa to form a lobby opposing interchange fee legislation, called the Electronic Payments Coalition.
They are opposed by a broad-based group of retailers called the Merchants Payments Coalition, which has been fighting MasterCard and Visa in the courts for years and lobbying for legislation.
Hank Armour, head of the National Association of Convenience Stores, a member of the Merchants Payments Coalition, yesterday said the Durbin bill will open up the lucrative market for interchange fees to more competition, to the benefit of the consumers. “Currently, credit card interchange rates are set in secret, hidden from view and exclude merchants from the negotiating process,” he said.
