A coalition of retailers is renewing its push to rein in the fees merchants pay to credit-card issuers whenever a shopper uses plastic.
The retailers are seizing on lawmakers’ appetite to overhaul financial regulation and crack down on the credit-card industry. They say the fees, known as interchange, must be fixed before the financial system can be stabilized.
An important source of revenue for many banks, interchange fees are loathed by merchants. The fees are levied on merchants every time a customer uses a credit or debit card to make a purchase. Set by the major credit-card companies, Visa Inc. (V) and MasterCard Inc. (MA), they are paid to card issuers via the merchant’s bank.
The retailers’ group, the Merchants Payments Coalition, is bringing pressure to bear on eight junior members of the House Financial Services Committee to support legislation to limit the fees. The strategy marks a shift from the last Congress, when retailers tried to push legislation sponsored by Judiciary Committee Chairman John Conyers, D-Mich., that would have granted merchants an antitrust exemption to negotiate as a group for lower fees.
Reps. Walter Minnick, D-Idaho, Jim Himes, D-Conn., Bill Foster, D-Ill., Paul Hodes, D-N.H., Dan Maffei, D-N.Y., Shelley Moore Capito, R-W.Va., Jim Gerlach, R-Pa., and Travis Childers, D-Miss., are those being targeted by the campaign.
Interchange fees vary by segment of the retail industry and by type of card. But on average, they amount to 1.75% of the purchase price, the card associations say. Interchange fees paid by merchants have grown from $16 billion in 2001 to $42 billion in 2007, according to the retailers.
A rule requiring merchants to accept all credit cards if they accept any at all could be eliminated, giving retailers more bargaining power to negotiate over the fees. Last year, legislation to allow retailers to band together to negotiate with Visa and MasterCard on the fees stalled in the House. That bill, which was approved by the House Judiciary Committee, so far has not been reintroduced this Congress.