As Hearing Nears, Another Interchange Bill Is in the Works

Payment card interchange will be in Congress's spotlight again on Thursday when the House Judiciary Committee holds a hearing about the controversial Credit Card Fair Fee Act of 2008, a bill that would put price controls on card-acceptance costs. Meanwhile, Sen. Richard Durbin, D-Ill., the assistant majority leader, is working on his own version of an interchange bill. The Judiciary Committee hearing on H.R. 5546 is set for 11 a.m. Eastern time. Introduced earlier this year by the panel's chairman, U.S. Rep. John Conyers Jr., D-Mich., and member U.S. Rep. Christopher B. Cannon, R-Utah, the proposal has strong endorsements from a host of retail trade groups, including the National Retail Federation and the Merchants Payments Coalition. Vehemently opposing it are the American Bankers Association, credit unions, and the Electronic Payments Coalition, a group that includes banking organizations, Visa Inc., MasterCard Inc., American Express Co., and non-bank card issuers. Some payments-industry lobbyists predict the bill will go nowhere despite the publicity and strong emotions it's elicited (Digital Transactions News, April 17). But the retailer groups, concerned about the ever-increasing cost of card acceptance, have managed to get the ear of lawmakers. The Conyers bill had a dozen co-sponsors early on but now has 29. A bill from Durbin would put the card industry further on the defensive, though exactly what his proposal will look like isn't clear. Whatever Durbin comes up with, however, probably won't please bank card issuers, the recipients of interchange. “The senator is certainly looking into the current interchange fee system and is looking at legislation to remedy what he sees as overall market failure,” a Durbin spokesperson tells Digital Transactions News. The spokepserson adds, however, that contrary to the implications in a recent report in a Washington political newsletter, the senator hasn't made any decision about whether his bill would be a copy of the Conyers bill. “It's sort of fluid,” he says, noting that Durbin could be out with a draft “in the coming weeks.” In a follow-up e-mail, the spokesperson noted that Durbin is seeking input from the opposing partisans. “We've asked both sides for information about interchange fees and for proposals to address what we see as a market failure,” the spokesperson says. The Conyers bill would give limited anti-trust immunity to so-called “access agreements” struck by the networks and merchants. If the parties couldn't reach agreement, a three-judge panel appointed by the U.S. Department of Justice and the Federal Trade Commission would have authority to impose rates. While the bill is often referred to as an interchange price-control proposal, the actual text does not even use the word interchange. Instead, it uses the terms “fees” and “access rates.” The Judiciary Committee hearing is expected to be Webcast at judiciary.house.gov/schedule.aspx