erchants angered by the way Visa U.S.A. and MasterCard International set interchange rates have taken their case to Washington. No one expects legislation to be an outcome of discussions now underway in Congress, but the foes of interchange are prevailing upon lawmakers to at least order a study of the economics and legalities of it.

"There's a lot of information we simply don't have," said Rep. Jan Schakowsky (D-IL) during a hearing held Feb. 15, 2006 before a House Energy and Commerce Subcommittee.

Schakowsky was responding to a recommendation from Edmund Mierzwinski, Consumer Program Director at U.S. Public Interest Research Group, that the panel request studies by both the Government Accountability Office and the Federal Reserve Board. Last fall, the House approved legislation requesting a Federal Trade Commission (FTC) study of interchange. It is presently awaiting action in the Senate.

"The success of the banks' legally suspect practices has given them tremendous market power," Mierzwinski said. "Merchants have no choice but to accept Visa and MasterCard products on the sellers' terms. Otherwise they lose customers and sales."

The sparsely attended hearing (only about a half dozen subcommittee members were present), at times resembled a verbal slug fest, with representatives of both banking and merchant groups accusing each other of "extortion." Timothy Muris, a former FTC Chairman and now a Washington lobbyist who presented testimony for the Electronic Payments Coalition, blamed greedy litigation attorneys for merchant unrest. That didn't go over well with Rep. Schakowsky, who took Muris to task for appearing before the panel on behalf of banks and bankcards just 18 months after leaving the FTC, the lead federal agency for enforcing consumer protection laws.

Muris and Karen Kerrigan, CEO of the Small Business and Entrepreneurship Council, both urged lawmakers to refrain from instituting price controls on interchange, as has been the case in Australia.

"We're not talking about price controls or price caps," said Henry Armour, President and CEO of the National Association of Convenience Stores. "We're talking about transparency. We'd like to help shine a light on what's going on in the marketplace to make market pricing as high as it is."