Legislation tackling the manner in which credit card purchase fees are imposed may be taken up by Congress before the end of the year.
For years, merchants have been complaining about credit card interchange fees that they are required to pay with every customer transaction.
Those fees range between 1% and 3%, and are not only burdensome on the merchant but also consumers, say critics. According to the National Retail Federation, the average American family “pays an extra $1,000 annually because of the rising cost of swipe fees.”
Currently, Visa and Mastercard, which represent more than 80% of the nation’s credit card market, process transactions through their own networks, with merchants having no choice but to accept the swipe fee imposed by the companies themselves.
As proposed, the Credit Card Competition Act will require that banks provide merchants with a wider range of payment network choices in processing transactions.
One of the measure’s sponsors, Illinois Democrat Dick Durbin, has charged that ultimately swipe fees increase prices on a variety of products, and added: “It’s time to inject real competition into the credit card network market, which is dominated by the Visa-Mastercard duopoly.”
In a statement, Doug Kantor, serving on the executive committee of the Merchants Payment Coalition, characterized the Credit Card Competition Act as legislation that will “lead to lower fees and better security, while helping merchants hold down prices.”
Opponents of the legislation, notes the site Bankrate, have said that if the bill is passed it will “result in a cutback on credit card rewards,” while also raising “card security concerns.”
Joining in the opposition is the Electronics Payment Coalition, which has maintained that the bill will “lead to the elimination of credit card benefits that consumers and small businesses rely on, such as credit card rewards for travel, dining, gas, points, groceries, and more.”
The big American Bankers Association has also weighed in, saying that the legislation could well “imperil payment system security and harm community financial institutions.”
It is not known when the Senate may take a final vote on the Credit Card Competition Act. A vote in the House cannot proceed until the lower chamber has elected a new Speaker.
By Garry Boulard
