On June 5, 2008, Sen. Dick Durbin, D-Ill., said, "There is no competition or negotiation involved in the setting of interchange fees." That same day, he introduced to the U.S. Senate a companion bill to the Credit Card Fair Fee Act of 2008.
Durbin's bill, which uses the same name as the act, is nearly identical to the House version introduced earlier this year by Reps. John Conyers, D-Mich., and Chris Cannon, R-Utah.
If passed, the bill would give limited antitrust protection to card acceptance rates that merchants reach with Visa Inc. and MasterCard Worldwide of their own accord. Retailers would be able to engage in collective negotiations over the fees and terms for access to the electronic payment system.
If an agreement between said parties can't be reached, the matter will go to arbitration. A three-judge panel appointed by the U.S. Department of Justice and the Federal Trade Commission would then impose arbitrated rates.
The panel's decision would govern access to the electronic payment system for a period of three years, but a voluntary agreement between retailers and providers would supersede the judges' rulings. Durbin's bill aims to protect consumers and retailers by preventing the credit card companies from arbitrarily setting what he feels are "unfair fees through an unfair process."
David P. Goch, an Attorney for the Electronic Transactions Association, said Durbin's bill has the same flaws as Conyer's and Cannon's: granting antitrust immunity while simultaneously allowing federal judges to arbitrate prices if the parties can't agree. Goch declared the bill "dead on arrival" while speaking at the ETA Annual Meeting & Expo in April 2008.
Goch also noted that the bill singles out Visa and MasterCard, but doesn't mention the other card brands. "I am still in the camp that the legislation is a long shot," he said. "It doesn't ring right."
Mallory Duncan, Senior Vice President of the National Retail Federation, sees momentum building that Congress is ready to bring the "credit card companies' greed" under control.
"This bill would give retailers the opportunity to negotiate terms on behalf of themselves and their customers that reflect the actual cost of the services provided, rather than the card brands' attempt to reap windfall profits from soaring prices," Duncan said.
Cannon believes the bill is a win for consumers, retailers and for the credit card industry, which he thinks will benefit from the competition. "This is a complicated issue, and though this bill may not be the final answer, society's interest in this is so great we hope all interested parties will come to the table," he said.
Analysts on both sides say the bill may languish on Capitol Hill for months, even years.
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