The U.S. House of Representatives approved its own version of credit-card reforms on April 30. But the Senate's debate has been slowed by lawmakers' amendments to the bill, [image-nocss] including one that would allow retailers and restaurants to give customers a discount if they paid by cash, check or debit card.
On Thursday, Senate leaders from both political parties sought to work out which amendments would be offered, according to a Senate aide. If they reached agreement, the Senate could hold a procedural vote later in the day, the aide said. Otherwise, action would be delayed until next week.
Business owners fed up with forking over a portion of their profits to credit-card companies so customers can use Visa or MasterCard are unlikely to see legislative relief anytime soon, added an Associated Press report.
Dodd, chairman of the Banking Committee, said he does not want to take up the issue just yet. "It's a complicated issue" and it "requires a little more work than frankly we're prepared to do on this bill," Dodd told reporters.
Senate Democratic Whip Dick Durbin (D-Ill.) wants legislation that would ensure merchants could offer discounts to customers who pay by cash, check or debit.
When businesses accept major credit cardsa convenience most customers demandthey sign agreements with the card companies to pay a percentage of each transaction, usually about 2 to 3%. Existing law says merchants can provide a discount to customers offering cash, but business owners say the rules included in the agreements are so convoluted that it's nearly impossible to do so.
Durbin's proposal, co-sponsored by Sen. Christopher Bond (R-Mo.), would expand the law to make debit cards eligible for discounts as well. The bill also says card companies can't insist on agreements that would make such discounts difficult.
"They harass you into not doing it," Lyle Beckwith of the National Association of Convenience Stores (NACS) told AP concerning retailers offering a discount to customers for paying with cash.
Banks that issue credit cards counter that Durbin's proposal would unfairly punish credit-card users and encourage merchants to advertise cash-only prices.
Dodd has described his credit-card reform bill as one that protects the consumer because it would prohibit arbitrary rate hikes and make it difficult for individuals under the age of 21 to acquire a card.
Business owners say sidestepping a debate on the interchange fees levied by credit-card companies is a key piece of that debate because the high cost of those fees are passed on to customers.
Dodd dismissed criticism that he was bending to the banks. "We're not kings," he said. Had he tried to insist on the amendment, it would have sunk the bill, Dodd said.
Bank industry groups have argued that excessive regulations could cut deeply into credit-card companies' revenues and limit their ability to price for risk, forcing them to raise some customers' interest rates and cut credit lines, said Reuters.
The Senate bill, authored by Christopher Dodd (D-Conn.), would prohibit card issuers from boosting interest rates in the first year after a credit-card account is opened and require promotional rates to last at least six months. It would also require credit-card statements to be mailed 21 days before a bill is due rather than the current 14.
Another provision would require cardholders to get 45 days' notice of any interest rate, fee and finance charge increases.
The legislative efforts mainly codify rules that the Federal Reserve and other banking regulators adopted last year but that do not go into effect until July 2010. Some lawmakers and consumer groups say Americans need relief sooner.
A final bill would also mark the first in a series of measures seeking to reshape U.S. financial services and market oversight, which many Democrats blame for contributing to the current financial crisis.
President Barack Obama urged Congress to pass a final credit-card reform bill by the end of May. "Enough is enough. It's time for strong, reliable protections for our consumers," Obama told a New Mexico audience. "You should not have to worry that when you sign up for a credit card, you're signing away all your rights. You shouldn't need a magnifying glass or a law degree to read the fine print."
Click here to view President Obama's radio address on consumer-credit card reform.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.