They're angry, they're organized and they're being heard. No, it's not some hardscrabble, anti-this-or-that protesters. It's a group of merchants who have come together through such organizations as the Merchant Payments Coalition, National Association of Convenience Stores (NACS) and the National Retail Federation. They want interchange reform - yesterday. And the U.S. Congress is bowing to the pressure.
U.S. House Judiciary Chairman John Conyers, D-Mich., and Rep. Chris Cannon, R-Utah, planned to introduce the Credit Card Fair Fee Act the week of Feb. 25, 2008. The bill will ostensibly provide a mechanism by which merchants can negotiate interchange fees with MasterCard Worldwide and Visa Inc.
The legislation will also establish a panel to decide on proper interchange rates should negotiating parties be unable to reach an agreement. The panel's decisions will be legally binding, if the act becomes law.
Congress held hearings on interchange in 2007. Retailers claimed the fees are arbitrary and exorbitant, costing merchants and consumers $40 billion per year. Visa and MasterCard assert that interchange fees are a necessary and fair cost for the services they provide. They also claim that merchants already have the right to negotiate interchange fees; merchants counter that they are completely out of the rate-setting loop.
However, the bill, which was first drafted in 2007, has been delayed, not due to lack of support, but because retailers and their representatives have swayed Congress to such a degree that interested legislators need an additional week or two to review the legislation and sign on as original cosponsors, according to John Eichberger, NACS Vice President, Government Relations. When was the last time you called Congress?
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