Congress considers credit card legislation

Filed under: Daily News | Tags:, ,

Congress is considering legislation that would require the two major credit companies to negotiate hidden credit card processing fees.

The fees cost the average household more than $400 annually.

“In the middle of one of the worst recessions seen in decades, consumers can’t continue to pay artificially inflated prices just so the credit card industry can skim profits off the top,” said National Retail Federation senior vice president Mallory Duncan. “It’s time for these fees to be brought under control.”

House Judiciary Committee Chairman John Conyers introduced H.R. 2695, the Credit Card Fair Fee Act of 2009. The measure is similar to the version of the bill that was approved by the committee during July 2008 and would require Visa and MasterCard banks to negotiate with merchants on “interchange” fees, which are currently imposed on merchants on a take-it-or-leave-it basis.

Interchange fees, which average close to 2 percent, are what Visa and MasterCard banks charge merchants every time a credit card is used to pay for a transaction. Visa and MasterCard effectively force merchants to pass the fees on to consumers by requiring them to be included in the advertised price of merchandise and making cash discounts difficult.

Interchange fees are largely unknown to most consumers because Visa and MasterCard prevent merchants from disclosing them on receipts and don’t disclose the fees on consumers’ monthly statements.

Interchange collections totaled $48 billion during 2008, up from $16.6 billion when NRF started tracking the fees during 2001. The higher prices that result from the fees cost the average household an estimated $427 last year, up from $159 in 2001.