The House Financial Services Committee does not plan to pursue interchange legislation this year, according to committee Chairman Barney Frank, D-Mass.
Frank on Wednesday told attendees at the Credit Union National Association’s Governmental Affairs Conference in Washington that interchange legislation “is not on our agenda this year.”
Steve Adamske, the banking committee’s spokesperson, tells PaymentsSource that “given our very crowded agenda, which involves dealing with the aftermath of the banking crisis, plus the difficulty of getting anything through the Senate right now, interchange legislation is not on the agenda for 2010.”
Frank is “not opposed” to interchange legislation, Adamske adds, noting, though, that introducing it again this year would be “an uphill climb.”
Payments-industry representatives were heartened by the news but remained cautious about ruling out a reprisal of various interchange bills proposed over the past few years that ultimately did not advance.
Last year, lawmakers pushed two bills to regulate interchange, including one that would require banks to enter into collective-bargaining agreements with retailers to set interchange rates. Another would enable merchants to introduce surcharges and allow them to opt not to accept cards with high interchange rates, such as those tied to rich rewards programs.
Merchant acquirers pay interchange to card issuers and pass the cost on to their merchant clients as part of the discount rate. Issuers use interchange revenue to cover their card-program costs and to generate income.
Interchange legislation may have been dealt a blow by an inconclusive government report that merchants had hoped would help prove its case.
Last year Congress mandated a study of interchange as part of the Credit Card Accountability, Responsibility and Disclosure Act. The General Accountability Office released its report last November, concluding that interchange raises merchants’ costs but that legislative proposals to regulate it so far were flawed
7-Eleven Inc. also made waves last July when it garnered 1.6 million signatures in a consumer petition supporting interchange regulation. MasterCard Worldwide said its own research revealed that most consumers signing the petition “mistakenly believed” consumers would directly benefit from a reduction in interchange rates
An American Bankers Association spokesperson tells PaymentsSource the association considers interchange a business-to-business issue. “But you never say never in this town,” the Washington, D.C.-based spokesperson says, adding “there is always the possibility that another committee will take up interchange legislation.”
The Electronic Payments Coalition, which represents some 60 payment-industry companies including the four major card networks, the nation’s largest banks and a number of state banking associations, welcomed the news that Frank does not plan to resume an interchange fight this year. “It’s not a surprise that (Frank) would move very deliberately before involving his committee in a fight between two businesses,” says a coalition spokesperson.
The National Retail Federation, a founding member of the Merchants Payments Coalition, remains optimistic that interchange legislation may yet advance. “Frank has not ruled anything out, he’s just saying they are not going to get to it this year through his committee,” says J. Craig Shearman, federation vice president of governmental affairs and a spokesperson for the coalition.
The House Judiciary Committee previously proposed interchange-rate regulation on an anticompetitive basis, Shearman notes. “We would certainly like to work with Frank’s committee on interchange, but in the meantime we will continue to pursue change through other avenues and we hope to see progress eventually,” he says.
