House lawmakers are moving to mandate that credit card companies negotiate the fees they charge merchants for electronic transactions, escalating an intense battle between the credit card industry and retailers.
A bill passed Wednesday by the House Judiciary Committee on a 19-16 vote is backed by retailers, who accuse Visa Inc. and MasterCard Inc. of levying excessive fees.
Card company executives counter that the legislation would simply push more of the cost onto consumers.
The so-called interchange fee, which Visa says averages about 1.6 percent, differs depending on the merchant and type of card.
The fees are set by Visa and MasterCard but are collected by the merchant's bank as part of a larger charge for processing the transaction. The credit card companies say they don't receive revenue from the fees.
Retailers complain the fees are set collectively by the credit card companies and large banks and are presented to merchants as a "take it or leave it" offer. Visa- and MasterCard-branded cards account for 80 percent of the credit card market.
Steve Pfister, senior vice president for government relations at the National Retail Federation, called the bill "a sensible solution to an escalating problem that's costing consumers more every day."
But Josh Floum, Visa's general counsel, said in a prepared statement that the bill "would mandate unnecessary regulatory intervention into a fiercely competitive industry that is benefiting consumers, merchants and financial institutions."
Edward L. Yingling, chief executive of the American Bankers Association, agreed and said the bill "is simply an effort by the merchant community to have government step in to reduce their cost of doing business."
Terms & Conditions
RSS Headlines
Fool UK