Interchange reformers get lukewarm reception from Congress

Opponents of the interchange status quo had another shot at grabbing congressional support Oct. 8, 2009, with a hearing before the U.S. House Financial Services Committee. The hearing was called to accept testimony on H.R. 2382, the Credit Card Interchange Fees Act of 2009, and H.R. 3639, the Expedited CARD Reform for Consumers Act of 2009. In terms of H.R. 2382, the hearing appeared to be more a formality than a serious attempt to address interchange legislation.

Committee Chairman Barney Frank, D-Mass., made it clear during the hearing that he was most interested in enacting legislation that would move up the implementation date on provisions of the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (Credit CARD Act of 2009).

The Credit CARD Act, signed into law in May 2009, established strict limits on how and when banks can increase rates on credit cardholders. Those limits are set to take hold in February 2010, but Frank and several other members of the panel want to move up implementation to December 2009 because, they said, too many banks are hiking rates for no obvious reason other than to get out in front of the CARD Act caps.

Interchange legislation under consideration

As for interchange, Frank has said he's still trying to get his arms around the issue and that testimony given on H.R. 2382 is part of that process. But some Washington insiders suggested Frank might have been sending a message to opponents of financial regulatory reform legislation he and other key Democrats are attempting to push through Congress.

H.R. 2382 was introduced by Rep. Peter Welch, D-Vt., who appeared before the House Financial Services Committee last week to urge consideration of "the plight of the small retailer." Joining Welch at the witness table was Kathy Miller, a constituent who runs a country store in Elmore, Vt., and who complained to the panel that she often loses money on small purchases because of interchange fees.

"[W]e just can't keep absorbing these fees and survive in these tough economic times," the Vermont store owner insisted.

The Credit Card Interchange Fees Act, as drafted by Welch and co-sponsored by a bipartisan group of 13 other House members, would allow merchants to impose minimum purchase amounts for card payments, prohibit Visa Inc. and MasterCard Worldwide from charging different interchange rates for transactions that use rewards cards, require public disclosure of merchant agreements and empower the Federal Trade Commission with oversight authority for the merchant acquiring space.

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