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House bill would address interchange fees
WASHINGTON (3/10/08)—A bill on credit card interchange fees was introduced in the House last week. H.R. 5546 is intended to ensure competitive market-based rates and terms for merchant’s access to electronic payment systems by enabling merchants to negotiate on fees with card companies. The bill was introduced by Rep. John Conyers (D-Mich.), who is chairman of the House Judiciary Committee, and is called the “Credit Card Fair Fee Act of 2008.” At issue are the fees charged merchants by credit card companies each time a consumer uses the card for a purchase. In a release, Conyers said the fees increased 117% between 2001 and 2006 and an additional 17% between 2006 and 2007. The fees amounted to $42 billion in that one-year period. Some proponents of legislation argue that the regulation of such fees in other parts of the world have produced lower fees for merchants and have prevented further escalation of fees. Some argue that it is unfair to merchants—and ultimately their customers-- to pay what they say amounts to a hidden revenue stream to the credit card issuers. However, others counter the pro-regulation arguments saying that the free market should set the interchange fees, not the government. They credit interchange fees with assisting the growth of universal acceptance of cards and the innovation of super-fast authorization technology and enhanced security measures. ”This legislation is intended to give merchants a seat at the table in the determination of these fees,” he said. “The bill creates a limited antitrust immunity for negotiating voluntary agreements and, if necessary, participating in the market-based proceedings.” These market-based proceedings will determine the exclusive rates and terms merchants must pay for a three year term. No other fees, terms or conditions may be imposed on the merchants. Under the bill, the rates and terms would be determined by Electronic Payment System Judges, to be appointed by the Department of Justice Antitrust Division and the Federal Trade Commission. The Credit Union National Association and its payments subcommittee are currently reviewing the 45-page bill to determine the extent of its impact on credit unions.


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