The bill (S. 1212) seeks to help level the playing field for retailers by giving them a seat at the negotiating table with banks to determine the fees assessed for every sale made by credit card, and ultimately reduce the costs of everyday goods for consumers.[image-nocss]
"Senator Durbin's introduction of this bill, following the introduction of similar legislation last week in the House of Representatives, is further proof that Congress is fed up with the shell game being played by the credit-card companies," said NACS chairman Sonja Hubbard, CEO of Texarkana, Texas-based E-Z Mart Stores. "Congress has already addressed outrageous lending fees and policies directly targeting consumers, and it is vital that it also address those secret fees and policies that affect merchants and their customers."
Credit-card swipe feescalled "interchange fees" by the big banks that set these ratesare a percentage of each transaction that Visa and MasterCard and their member banks collect from retailers every time a credit or debit card is used. These fees average about 2% in the United States, the highest rate in the industrialized world.
"It is time to level the playing field for merchants and consumers," said Sen. John Conyers (D-Mich.) said in a statement introducing the bill. "It is not an attempt at regulating the industry and does not mandate any particular outcome. This bill simply enhances competition by allowing merchants to negotiate with the dominant banks for the terms and rates of the fees."
In 2008, credit-card fees cost U.S. convenience stores $8.4 billioncompared to only $5.2 billion in store profits, according to NACS data. Almost all of these credit-card fees are attributable to swipe fees.
In a separate statement, the Petroleum Marketers Association of America (PMAA) said, "PMAA and the Merchants Payment Coalition (MPC) continue to urge legislators to pass language that will give retailer groups the opportunity to negotiate interchange fees in a transparent environment. PMAA believes these negotiations will put downward pressure on interchange fees and force credit card companies to provide justification for the rates charged."
The National Retail Federation (NRF) also said it welcomed the introduction of the Senate legislation that would require Visa and MasterCard to negotiate over hidden credit-card processing fees that cost the average household more $400 a year and total more than $48 billion annually.
"This bill is the next step in the credit-card reform process that Congress began last month," NRF senior vice president and general counsel Mallory Duncan said. "Congress can't claim to have fixed credit-cards without addressing the billions of dollars in artificially inflated prices that result from credit-card interchange fees. This legislation shows that lawmakers are ready to finish the job and protect consumers from these rapidly increasing fees."
Interchange received significant attention last month as Congress considered the Credit Card Accountability, Responsibility & Disclosure Act of 2009, which was signed into law May 22 by President Barack Obama. The Credit CARD Act includes a provision requiring the Government Accountability Office (GAO) to conduct a study of how interchange drives up retail prices, why the card industry refuses to disclose the fees to consumers and how card companies keep retailers from offering cash discounts, among other issues.
Durbin sought to add an amendment to the Credit CARD Act that would have prohibited credit-card companies from interfering with retailers who offer a discount to customers who pay by cash, check or debit card rather than credit card, but the attempt was blocked by card industry lobbying efforts. The discount is not included in his interchange bill, but Durbin has said he will attempt to attach it to other legislation.
On the other side of the issue, the Electronic Payments Coalition (EPC) said it "strongly opposes interchange legislation...a bill nearly identical to one that received broad bipartisan opposition last year. This legislation is an attempt by giant retailers to make consumers pay for one of their business expensesthe cost of accepting credit and debit. It's simple: merchants do not want to pay their fair share to accept debit and credit cards, and they want consumers to foot the bill.
If this legislation passes, American families will end up footing retailers' bills when it comes to accepting debit and credit cards."
It added, "Merchants that accept credit and debit cards benefit from more sales, lower costs and greater profits. It is only fair that they pay a fee for this service.... We understand that every business wants to find ways to cut overhead costs for valued services, but forcing consumers to pick up the bill for giant retailers just isn't fair. Consumers pay their bills. Giant retailers should pay theirs, too. On behalf of every American consumer who pays his or her own bills, the Electronic Payments Coalition urges Congress to oppose this harmful legislation."
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