WASHINGTON Two major business associations have thrown their support behind a Senate measure that would enable restaurateurs and other businesses to negotiate lower transaction, or interchange, fees with credit card companies and their banks.
Officials from the National Restaurant Association and the National Retail Federation, the parent of the National Council of Chain Restaurants, both said they welcome the Credit Card Fair Fee Act of 2009, introduced by Sen. Dick Durbin, D-Ill.
Interchange fees, which average about 2 percent, are determined collectively by credit card companies’ banks. Operators argue that they have no choice but to accept the fees as presented or stop accepting credit cards altogether. Credit card companies oppose the measure as unnecessary government intervention.
The bill is aimed particularly at credit-card companies Visa and MasterCard, which together control more than 80 percent of the market.
According to a survey by the NRA, customers use credit or debit cards to pay for 45 percent of all transactions at family-dining locations, 60 percent at casual-dining operations and 80 percent at fine-dining restaurants.
Interchange fees totaled $48 billion in 2008, according to the NRF, up from $16.6 billion in 2001.
According to the Durbin measure, businesses would be able to negotiate as a group, and if an agreement could not be reached, both sides would have to submit their final offers to binding arbitration by a three-judge panel established by the U.S. Department of Justice and Federal Trade Commission.
“We applaud Sen. Durbin for taking a stand against the unfair practice of credit card companies and member banks setting an interchange ‘swipe’ fee with zero transparency or negotiation with merchants,” said Beth Johnson, the NRA’s vice president of public affairs. “The Credit Card Fair Fee Act would allow for a fair process, and cut costs for consumers and retailers.”
“This bill is the next step in the credit card reform process that Congress began last month,” said Mallory Duncan, NRF’s senior vice president and general counsel. “Congress can’t claim to have fixed credit cards without addressing the billions of dollars in artificially inflated prices that result from credit card interchange fees. This legislation shows that lawmakers are ready to finish the job and protect consumers from these rapidly increasing fees.”
The companion measure in the House, H.R. 2695, was introduced June 4 by Rep. John Conyers Jr., D-Mich.
Following the introduction of Conyers’ bill, MasterCard said in a statement that it opposed the measure, which “by exempting merchants from antitrust laws, would take away the fundamental protections that these laws provide consumers. This would result in less credit availability, along with higher prices and reduced benefits when Americans choose to use their credit or debit cards. Antitrust laws are designed to protect competition and consumers, but this bill would have the opposite effect.”
Contact Paul Frumkin at [email protected].