Peachy Legislation

Georgia associations hail new state bill intended to rein in credit-card

ATLANTA -- In the absence of progress on a national level to address the impact of credit-card interchange fees, the Georgia Association of Convenience Stores (GACS) and other retail groups in the Peach State are praising a state-level proposal to regulate the fees that cost the c-store industry billions of dollars each year. The new legislation introduced this week will rein in existing abusive practices by credit-card companies, according to the associations who joined in praising the bill.

Joining GACS in the announcement were representatives from the Georgia Food Industry [image-nocss] Association (GFIA), the Georgia Oilmen's Association (GOA), the Georgia Retail Association (GRA), the Atlanta Retailer's Association (ARA) and the Georgia Alcohol Dealer's Association (GADA).

Bipartisan legislation (House Bill 1456) introduced by State representatives John Lunsford (R), James Mills (R), Mike Coan (R), Alan Powell (D) and Roger Williams (R) and others "will bring much-needed restraint to an out-of-control industry," said GACS chairman Rob Patterson, president of Macon-based Mini-Foods Inc.

Credit- and debit-card interchange fees, or "swipe fees," are a percentage of each transaction that Visa and MasterCard member banks collect from retailers every time a credit or debit card is used. These fees average about 2% in the United States, which the associations said is the highest rate in the industrialized world. These fees are non-negotiable, inflating the prices consumers pay for goods and services.

The bill takes aim at the unfair practices that Visa and MasterCard engage in to keep these fees far too high, the groups said.

Among other things, the bill would: Prohibit the credit-card companies (Visa and MasterCard) from centrally fixing the prices of interchange fees. Prohibit credit-card companies from fining or penalizing retailers for their pricing displays. End the "honor-all-cards" rule that requires retailers to accept every type of card the companies issue, regardless of the cost to the retailer. Allow retailers to set minimum and/or maximum transaction amounts without being fined or penalized by the credit card companies that currently dictate all cardholder contracts. Allow retailers to determine which business locations will, and will not, accept cards, without being fined or penalized by the credit-card companies. "The consumer-friendly legislation introduced this week addresses unfair practices by the nation's largest financial institutions that cost Americans $48 billion in credit- and debit-card 'swipe' fees," said GFIA president Kathy Kuzava in hailing the legislation.

"This bill would eliminate the anti-competitive rules Visa and MasterCard impose on retailers, increase transparency in the payment card industry and allow competitive markets to help keep these fees down," added GOA president Roger Lane.

Courts have found that Visa and MasterCard and their member banks have market power.

"The credit card companies are notorious for abuses against individual cardholders, and they treat business owners the same way. This legislation will bring much-needed restraint to an out-of-control industry," said GRA president John Heavener.

HB 1456 was assigned to the House Banks & Banking Committee, chaired by bill co-sponsor James Mills.

(Click here for previous CSP Daily News coverage of interchange fees.)