Retailers Support New Card-Fee Legislation

MARK HAMSTRA

WASHINGTON — The House Judiciary Committee has introduced legislation that calls for merchants, credit card companies and banks to negotiate interchange fees that would be set for three years at a time.

The fees, which are charged as a percentage of each transaction by the banks that issue the cards and then passed on to retailers, have been increasing rapidly in recent years, retailers said. Getting Congress to take action has been a top priority for the food retailing industry.

“This is really one of the most important pieces of legislation that we've seen for our industry in a long time, so we are delighted,” Steve Smith, chairman of Food Marketing Institute, Alexandria, Va., and chief executive officer of K-VA-T Food Stores, Abingdon, Va., told SN.

The proposal (H.R. 5546), dubbed the “Credit Card Fair Fee Act,” was introduced by a bipartisan team led by House Judiciary Committee Chairman John Conyers, D-Mich., and Rep. Chris Cannon, R-Utah. The introduction of this legislation follows three congressional hearings on the issue.

It would grant a “limited antitrust immunity” for a committee of retailers to negotiate the fees with the banks and card companies. If no agreement can be reached, the fees would be determined in binding arbitration “by a panel of experts,” FMI explained.

“All we want is the ability to negotiate a fair price, just like we do with our other suppliers,” Smith said.

Tom Zaucha, president and CEO of National Grocers Association, Arlington, Va., said the bill was “an important step” that would provide a “more competitive and transparent credit card fee system.”

The credit card companies and banks responded quickly to the bill, describing it as “price control legislation.”

“MasterCard believes there is no need for government intervention, and that it would be inappropriate for the U.S. government to set prices and negotiate the terms of contracts for private commercial entities,” MasterCard said in a prepared statement. “Such policy decisions in the past have proven to be unworkable, unpopular and detrimental to the free market economy.”

Smith said he thinks the House “has an appetite for the bill.”

“Hopefully, we'll have some bipartisan support in the Senate as well,” he said.