Paul Sakuma, Associated Press
The Credit Card Fair Fee Act aims to let businesses negotiate for a better interchange fee.

WASHINGTON — Retailers want to see their credit-card bills go down, and a measure making its way through Congress aims to accomplish that.

House Judiciary Chairman John Conyers, D-Mich., and Utah's Rep. Chris Cannon, the top Republican on the Commercial and Administrative Law Subcommittee, along with 11 other members of Congress, introduced the Credit Card Fair Fee Act this month.

The bill aims to let retailers and other businesses join together to negotiate for a better interchange fee, the term for fees paid by a merchant's bank to the cardholder's bank as part of a Visa or MasterCard transaction. American Express, Discover and other credit cards use a different model.

Currently, banks set the interchange fees for Visa and MasterCard. Under the bill, if the businesses' negotiators couldn't come to an agreement after a certain time period, a three-judge panel would make a decision.

Grocery stores, gas stations and virtually anyone that accepts Visa or MasterCard claim the fees they pay to accept the cards are spiraling out of control. The retailers want Congress to intervene. But credit-card companies and banks say this is just a cost of doing business and want to keep things just as they are now. They oppose the bill, saying it would not solve what the retailers and other businesses say it would.

Conyers said on the House floor that the bill is not an attempt at regulating the industry and does not mandate any particular outcome.

"This legislation simply enhances competition by allowing merchants to negotiate with the dominant banks for the terms and rates of the fees," he said.

Cannon said the current system is "anti-competitive and secretive."

"This bill does not set prices," he said. "Instead, it would require that fees be set in a transparent manner, so other companies can compete for business and consumers would not pay artificially high rates."

But the Electronic Payments Coalition, a 54-member group that includes Visa, MasterCard, Bank of America and various banking associations, said the bill would not help anyone.

Peter Madigan, the coalition's executive director, said claims that the bill would benefit consumers are "hogwash," because nothing in the legislation says the merchants would have to pass along their savings on lower fees to consumers. The bill's aim is to control prices for businesses, he said.

"It's a price-control bill dressed in a negotiation costume," Madigan said.

Interchange fees have not increased, but the volume of people using credit cards for payment has risen, increasing the amount of fees paid, which is just a cost of doing business, he said.

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,, 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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