New Senate Bill Joins House Credit Card Fair Fee Act
ARLINGTON, Va. -- The U.S. Senate introduced legislation aimed at providing transparency and fairness to the highly contested issue of credit card transaction fees last week. The bill specifically underscored hidden interchange fees, which will cost retailers an estimated $50 billion this year.
Sen. Richard Durbin of Illinois, the second ranking Democrat, introduced the Credit Card Fair Fee Act of 2008, which is companion legislation to a U.S. House of Representatives bill with the same name (H.R. 5546). In total, 37 representatives support the legislation including 20 Democrats and 17 Republicans.
"There is no meaningful competition or negotiation involved in the setting of interchange fees," Durbin said in a released statement.
Among those in support of the legislation are the Food Marketing Institute (FMI) and The National Retail Federation (NRF). "This law gives retailers a seat at the table to negotiate fair and reasonable transaction fees with credit card companies," John Motley, III, FMI senior vice present of government and public affairs, said in a released statement. "It would put an end to the anti-competitive and anti-consumer system in which the credit card company networks fix these fees in secret with impunity."
NRF Senior Vice President and General Counsel Mallory Duncan explained the antitrust legislation would require Visa and MasterCard to negotiate with merchants over hidden credit card processing fees that cost the average family more than $400 a year.
"The introduction of this bill shows momentum is building in Congress and that both the House and Senate are ready to bring the credit card companies' greed under control," Duncan said in a released statement. "This is a fee most consumers don't even know about, but it's the equivalent to half a dozen tanks of gas or a month's worth of groceries. If consumers knew how much they were paying for credit cards, most would say it isn't worth the price, particularly in today's economy."
Reuters reported that Visa and MasterCard have denied that fee rates have increased. In a statement, Visa said Durbin's legislation represents "unnecessary government intrusion" in a competitive marketplace that has benefited consumers, merchants and banks. "It would suppress competition and innovation, and would harm consumers and small financial institutions in particular," Visa said.
The proposed legislation would require a committee of merchants and representatives of card companies and banks to negotiate fees for debit and credit card transactions, reported Reuters. The committee would negotiate which costs the fees should cover, such as computer processing, communications and system maintenance, and which would also provide financial institutions a reasonable rate of return. If the negotiators cannot reach an agreement, the decision would move to binding arbitration.
Legislation remains pending.
Sen. Richard Durbin of Illinois, the second ranking Democrat, introduced the Credit Card Fair Fee Act of 2008, which is companion legislation to a U.S. House of Representatives bill with the same name (H.R. 5546). In total, 37 representatives support the legislation including 20 Democrats and 17 Republicans.
"There is no meaningful competition or negotiation involved in the setting of interchange fees," Durbin said in a released statement.
Among those in support of the legislation are the Food Marketing Institute (FMI) and The National Retail Federation (NRF). "This law gives retailers a seat at the table to negotiate fair and reasonable transaction fees with credit card companies," John Motley, III, FMI senior vice present of government and public affairs, said in a released statement. "It would put an end to the anti-competitive and anti-consumer system in which the credit card company networks fix these fees in secret with impunity."
NRF Senior Vice President and General Counsel Mallory Duncan explained the antitrust legislation would require Visa and MasterCard to negotiate with merchants over hidden credit card processing fees that cost the average family more than $400 a year.
"The introduction of this bill shows momentum is building in Congress and that both the House and Senate are ready to bring the credit card companies' greed under control," Duncan said in a released statement. "This is a fee most consumers don't even know about, but it's the equivalent to half a dozen tanks of gas or a month's worth of groceries. If consumers knew how much they were paying for credit cards, most would say it isn't worth the price, particularly in today's economy."
Reuters reported that Visa and MasterCard have denied that fee rates have increased. In a statement, Visa said Durbin's legislation represents "unnecessary government intrusion" in a competitive marketplace that has benefited consumers, merchants and banks. "It would suppress competition and innovation, and would harm consumers and small financial institutions in particular," Visa said.
The proposed legislation would require a committee of merchants and representatives of card companies and banks to negotiate fees for debit and credit card transactions, reported Reuters. The committee would negotiate which costs the fees should cover, such as computer processing, communications and system maintenance, and which would also provide financial institutions a reasonable rate of return. If the negotiators cannot reach an agreement, the decision would move to binding arbitration.
Legislation remains pending.