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Interchange bill markup expected Wednesday
WASHINGTON (7/14/08)--The House Judiciary Committee is expected to vote Wednesday on bill that would set up a government tribunal as mediator in disputes that could occur relating to interchange fees based on consumer use of credit and debit cards. The committee will likely take up a bill known as the Credit Card Fair Fee Act (H.R. 5546), according to the Electronic Payments Coalition (EPC), of which the Credit Union National Association (CUNA) is a member. The legislation would give merchants an antitrust exemption to negotiate interchange fees. At issue are the fees charged merchants by credit card companies each time a consumer uses a card for a purchase. H.R. 5546 has a companion bill (S. 3086) of the same name pending action in the Senate. Additionally, Rep. Peter Welch (D-Vt.) has introduced a bill to require credit card companies to disclose their interchange rates, terms, and conditions to consumers and businesses. CUNA, all members of the EPC and the U.S. Department of Justice are among opponents of the “fair fee” legislation. CUNA opposes legislation that would regulate interchange because it believes that such action would adversely affect consumer options, competition and technology innovation. Credit unions use interchange fee revenue to offer credit and debit cards to their members. The revenue covers the costs and risks the credit union incurs in the card system, including consumer nonpayment and fraud. The Justice Department, commenting on the plan, wrote earlier this month, “The antitrust laws are the chief legal protector of the free-market principles on which the American economy is based. Companies free from competitive pressures have incentives to raise prices, reduce output, and limit investments in expansion and innovation to the detriment of the American consumer." The letter also warned that the bill seeks to counter "perceived market power on the part of large credit card networks" by shifting power to merchants negotiating with those networks. In a related story, a bill introduced last week by Senate Banking Committee Chairman Christopher Dodd (D-Conn.) to address abusive credit card practices includes a provision that would require a government study of interchange fees. (See “Dodd introduces his credit card curbs“)


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