Nine states have introduced a total of 15 bills concerning the credit card interchange fees that cost U.S. merchants and consumers $36 billion last year, according to a survey of state legislative activity compiled by the Merchants Payments Coalition. Legislative proposals range from those that would prohibit card-issuing banks from charging interchange fees on the sales tax portion of a retail transaction to requirements that credit card companies fully disclose their rules and policies to merchants and consumers.
The interchange fee is a percentage of each transaction that credit card companies collect from merchants every time a credit or signature debit card is used to pay for a purchase. The fee varies with type of merchant, transaction and card, but averages close to two percent for most transactions. Visa and MasterCard interchange fees totaled $36 billion in 2006, up 17 percent from 2005 and 117 percent since 2001, according to some estimates. Visa and MasterCard do not disclose interchange fees on monthly statements, and their operating rules prohibit retailers from showing the charge on sales receipts.
Bills to ban interchange fees on the sales tax portion of transactions have been introduced in Florida, Kansas, Nevada, New York and Washington. Kentucky, Nebraska and Texas have introduced bills requiring credit card companies and issuing banks to be more transparent in disclosing rules and fees. Proposed legislation in Tennessee would cap interchange rates at 0.75 percent.
The U.S. House Judiciary Committee’s Antitrust Task Force is expected to hold a hearing on interchange fees this month. Members of Congress are expected to use the hearing to examine the impact of interchange fees on consumers and businesses as well as the antitrust law implications of the interchange fee system.
The hearing would be the fourth congressional session this year to examine credit card fees and the first to focus specifically on interchange fees. Last year, the Senate Judiciary Committee and a House Energy and Commerce Subcommittee held major hearings on whether interchange practices violate federal antitrust laws and the consumer protection impacts of the fees.
PBA members concerned about this issue can email their state and federal representatives using PBA's new "Find Your Elected Officials" page.
For more information, please contact Sam Leyvas, PBA's Government Affairs Director at 800.468.2274 x118.
posted: sam leyvas
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