Howard Headlee, president of the Utah Banker's Association, said the legislation is "misguided."

"The government wants to come in and fix something that's not broken," Headlee said. "If the government gets involved, the cost of the system is only going to go up. More regulation does not lower costs."

Jim Olsen, president of the Utah Retail Merchants Association, said businesses nationwide pay about $40 billion a year for these interchange fees, which he said amounts to a "hidden tax" that can be nearly 2 percent of a transaction's purchase price.

"Every time a person buys something, there is a cost built into that product to pay for these fees," Olsen said.

The coalition representing the credit-card companies points out that merchants get more sales, faster payment and other benefits from accepting credit cards. Any attempt to call the fees a so-called hidden tax would be similar to trying to misrepresent businesses' rent or salaries for employees as a 'hidden tax' on their customers," the coalition said.

The coalition said that Visa and MasterCard have their merchant guidelines and a list of interchange fees available online, and merchants have the option of charging people less who pay with cash.

The Utah Food Industry Association, the Utah Retail Merchants Association and the Utah Petroleum Marketers and Retailers Association have all formed their own group, the Merchant Payment Coalition, which has created a Web site, unfaircreditcardfees.com, supporting the bill.

They claim Visa and MasterCard hold about 80 percent of the credit-card transaction market and "operate like price-fixing cartels, each one imposing oppressive credit-card interchange fees and rules on merchants on a 'take-it-or-leave-it' basis," according to the group.

Craig Shearman, vice president of government relations at the National Retail Federation, which is part of the coalition, said the inter- change-fee policies are not clear and make it hard for merchants to know what fees they actually pay. Different types of credit cards under the MasterCard or Visa umbrella get charged different fees.

A "plain vanilla" card with no perks for the cardholder costs a business one fee to accept, while a card that offers a cash-back option, airline miles or some type of points program costs a different amount in fees, he said. Businesses cannot pick or choose what type of cards to accept.

Jerry Dewey, vice president of government relations for Salt Lake City-based Associated Food Stores Inc. said in a group of 20 stores that the company operates, it paid about $3 million in credit-card interchange fees last year.

"If you don't agree to their collusive behavior, name me a business that can stay in business without accepting plastic," Dewey said.

But Headlee, with the bankers association, said consumers clearly favor the convenience of paying with plastic and the airline miles or other rewards their cards offer. The bill "is trying to fix something that is really a shining example of what is working in the industry," he said.

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E-mail: suzanne@desnews.com