business news in context, analysis with attitude

A new bill has been introduced in the US Senate that would allow retailers large and small to negotiate transaction fees with credit card companies such as MasterCard and Visa. The legislation was introduced by Sen. Richard Durbin (D-Illinois), who said, “There is no meaningful competition or negotiation involved in the setting of interchange fees.”

A similar bill already has been introduced in the House of Representatives.

Visa released a statement in which it described the legislation as “unnecessary government intrusion” that would “suppress competition and innovation, and would harm consumers and small financial institutions in particular.”

The Food Marketing Institute (FMI) lauded the bill, saying that it would “create a truly competitive and transparent market for setting credit card transaction fees, especially the hidden interchange fees, which alone are projected to cost retailers and ultimately consumers nearly $50 billion this year.”

“This law gives retailers a seat at the table to negotiate fair and reasonable transaction fees with credit card companies,” said John J. Motley, III, FMI’s senior vice present of government and public affairs. “It would put an end to the anti-competitive and anti-consumer system in which the credit card company networks fix these fees in secret with impunity.

The National Retail Federation (NRF) released a similar statement of support: “The introduction of this bill shows momentum is building in Congress and that both the House and Senate are ready to bring the credit card companies’ greed under control,” said NRF Senior Vice President and General Counsel Mallory Duncan. “This is a fee most consumers don’t even know about, but it’s the equivalent to half a dozen tanks of gas or a month’s worth of groceries. If consumers knew how much they were paying for credit cards, most would say it isn’t worth the price, particularly in today’s economy.”

KC's View:
I think that anything the government can do to bring transparency to the credit card business is a good thing.

However, I can't help but chuckle. “Unnecessary government intrusion.” It is amazing how fluid a term that is, to be used when the government acts against our interests but never to be uttered when politicians actually come down on our side of the issue.