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Table of Contents

Lead Story

Redemption in recession

News

Industry Update

Companion bill targets interchange fees

And in this corner: Discover

MasterCard IPO soaring

FTC disconnects alleged phone card scam

Prepaid Expo coming to Caesars

Features

AgenTalkSM:
Neal Tichelkamp

Select-A-Branch grows ATM network

Travis K. Kircher
ATMmarketplace.com

Industry Leader

Jim Baumgartner –
Born to do business

Views

Honoring early mavericks

Patti Murphy
The Takoma Group

Education

Street SmartsSM:
Add value to enhance your value

Jason Felts
Advanced Merchant Services

POS as a second language

Dale S. Laszig
DSL Direct LLC

Portfolio sold: How much goes to Uncle Sam?

Michael Laird
Certified Public Accountant

Marketing mishaps to avoid

Nancy Drexler
SignaPay Ltd.

Little to fear in buyer's market

Lane Gordon
MerchantPortfolios.com

Company Profile

PayProTec

New Products

FACTA the future

Safe2Change
ID Insight Inc.

Protect data with hidden shield

VeriShield Protect
VeriFone

Inspiration

Dump perfectionism, do reality check

Departments

Forum

Resource Guide

Datebook

A Bigger Thing

The Green Sheet Online Edition

June 23, 2008  •  Issue 08:06:02

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Companion bill targets interchange fees

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."

Dead on arrival?

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."

Greed out of control?

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.

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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