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Payments-industry advocates this week are lobbying lawmakers against adopting a possible amendment to new credit card legislation that would enable merchants to steer consumers to use lower-cost cards and would force new transparency in interchange-rate rules. Observers expect Sens. Richard Durbin, D-Ill., and Kit Bond, R-Mo., to offer the amendment this week as part of the Credit Cardholders' Bill of Rights, which the U.S. Senate is considering this week (CardLine, 5/11). The Durbin/Bond Consumer Discount and Fee Transparency Amendment would permit merchants to offer discounts to consumers who pay with cards that impose lower interchange rates, such as debit cards and some credit cards. The amendment also would direct the Federal Reserve Board to gather and publish interchange and other payment card rates or fees and the rules governing them. The Merchants Payments Coalition, which claims interchange cost consumers $48 billion last year in hidden costs, has been pushing for interchange-rate relief through legislation (CardLine, 3/30). The American Bankers Association and three other financial-services organizations yesterday sent a letter to all U.S. senators warning them that Durbin's amendment could reduce consumer access to credit and hurt the economy. "Interchange is a complex issue, and Congress should not act precipitously to adopt the Durbin amendment without the benefit of this study, a hearing record, or the slightest analysis of the potential consequences for consumers, credit unions, banks and our economy," states the letter, which also was signed by the Independent Community Bankers of America, the Credit Union National Association and the National Association of Federal Credit Unions. The letter instead recommends that the comptroller general, who heads the Government Accountability Office, conduct a detailed study of interchange and make recommendations to Congress, a provision already included in amendments to the Cardholders' Bill of Rights.
