Legislation requiring that creditors consider a bill as having been paid on the date a check was mailed took a beating on Capitol Hill Wednesday.
At a House Government Reform and Oversight postal service subcommittee hearing, a panel of industry representatives said the bill would require the purchase of expensive new processing equipment, which could cost financial institutions tens of millions of dollars.
After the hearing, lawmakers said they were convinced.
"We've heard too many legitimate concerns about the bill to even consider sending it out in its present form," said Rep. Robert Ehrlich, R- Md.
Subcommittee Chairman John McHugh introduced the legislation last year in response to complaints from constituents who said they had been hit with late fees despite mailing their payments on time.
While it was unclear Wednesday what form the final bill might take, the New York Republican suggested that mandating a uniform grace period for all financial institutions would make it clearer to customers when their payments are due.
However, Joseph Bracewell, president and chief executive of Century National Bank, Washington, D.C., argued that this would rob financial institutions of a competitive tool - the ability to offer longer grace periods than the lender down the street.
"It's a mechanism whereby financial services can compete," said Mr. Bracewell, who testified on behalf of the Independent Bankers Association of America, the American Bankers Association, the Consumer Bankers Association, and a number of other bank and thrift groups.
A panel of payment processing equipment firms supported the financial industry's position that the McHugh bill would cost a fortune.
"The only option would be for companies to revert back to a much more labor-intensive form of payment processing, thereby increasing costs and error rates and reducing processing efficiency," said Tod Mongan, senior vice president of Dallas-based Banctec Inc.