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Merchants this week lost another round when the Credit Cardholders' Bill of Rights bill the Senate approved yesterday excluded a provision that would have given them a break on interchange–the fees that are part of the discount rate merchants pay acquirers to accept payment cards. The interchange-rate amendment from Sens. Dick Durbin, D-Ill., and Kit Bond, R-Mo., would have encouraged merchants to offer discounts for cash, debit and check purchases (CardLine, 5/14). One element of that amendment passed—a stipulation that the Comptroller General conduct an in-depth study of interchange, including large and small merchants' ability to negotiate with card networks in setting fees and merchants' access to card-network rules. The report is due within 180 days of the bill's enactment. Merchants were disappointed the card-discount provision did not pass but remain hopeful that alternative legislation will emerge this year to address interchange, J. Craig Shearman, vice president of governmental affairs for the National Retail Federation, tells CardLine. Shearman also is a spokesperson for the Merchants Payments Association, which claims interchange cost consumers $48 billion last year. "With the amount of attention on this issue this year, we think the atmosphere is right for bringing the credit card and banking industries around to handling interchange in a fair manner," he says. The point-of-sale discount measure would only partially resolve merchants' interchange-rate headaches, Shearman notes. "Discounts would be a step in the right direction, but what we are pushing for is legislation that would require Visa and MasterCard to negotiate interchange fees to bring them to a reasonable level," he says. Merchants have also discussed pushing legislation that would cap interchange rates. "Capping interchange would probably be the most efficient approach to regulating rates, but the effect of cutting deeply into interchange revenue would be devastating for card issuers just as they are absorbing the loss of other fees from the card-reform bill," Adil Moussa, an analyst with Aite Group, tells CardLine.
