The outcry of small business owners over interchange rates has been heard by their representatives in Congress… sort of. Three bills are currently in the legislative pipeline that would regulate interchange fees. Below are quick summaries and links that will allow you to track the progress (however unlikely) of these bills.
S.1212 The Credit Card Fair Fee Act
Summary: This bill proposes an ambitious bureaucratic solution. S.1212 would direct the Attorney General to appoint a panel of three Electronic Payment System Judges. The judges would have broad authority to set rules on interchange rates and terms of access to payment systems. This bill is my favorite piece of legislation from what has so far been proposed. I’m actually somewhat surprised it was even proposed – I thought command and control price setting (by the government at least) was taboo in this country.
Status: This bill was introduced by Dick Durbin in June, and was referred to the judicial committee. The committee has not taken up the bill.
H.R. 2965 The Credit Card Fair Fee Act
Summary: H.R. 2965 would alter antitrust laws to allow merchants to negotiate with acquirer banks to set interchange rates. Apparently, these negotiations would be illegal price-fixing practices under current antitrust laws. In my view this solution would do very little for small merchants. The only merchants that could effectively leverage negotiations with the uber-bank acquirers would be the Walmarts of the world, giving big merchants another competitive advantage over small merchants.
Status: This bill was introduced introduced in the House by John Conyers (D MI-14) and Bill Shuster (R PA-9) in June, and referred to the House Judiciary Commitee, which hasn’t taken up the bill.
H.R. 2382 The Credit Card Interchange Fees Act
Summary: H.R. 2382 takes aim at regulating discrete elements of the payment processors’ unfair business practices, by (1) protecting rights of merchants to post interchange rates information for customers, (2) protecting rights of merchants to not honor all cards (such as high-rate rewards cards), (3) protecting rights of merchants to steer customers to payment methods, (4) protecting rights of merchants to establish minimum amounts for payments with credit cards, and (5) prohibiting requirements for minimum numbers of transactions. I think this bill would be helpful if enacted.
Status: This bill was introduced in the House in June by Peter Welch (D VT). It has been referred to the House Committee on Financial Services, which has held hearings, but has not voted to send the bill back to the floor.
I am not optimistic about the prospects of any of these bills being passed. They are all in committee, where the influence of the lobbyists is at its most pernicious — and the powers that stand to lose from these bills have very influential lobbyists. By this reasoning, I think something like H.R. 2965 is most likely to be enacted, because it would benefit the huge retailers, who also have effective lobbyists. Nevertheless, Congresscritters do love to spout off about their love for small business, so maybe there is some chance that we can make them do something useful, such as pass S.1212 or H.R. 2382.
* Photo by KrS-NrY http://www.flickr.com/photos/9040545@N06/3440552648/
