Introduction of the "Credit Card Fair Fee Act of 2009"

Floor Speech

INTRODUCTION OF THE ``CREDIT CARD FAIR FEE ACT OF 2009'' -- (Extensions of Remarks - June 04, 2009)

* Mr. CONYERS. Madam Speaker, today I am introducing the ``Credit Card Fair Fee Act of 2009,'' legislation that would help level the playing field for merchants and retailers negotiating with banks for the cost of certain fees, and ultimately reduce the costs of everyday goods for consumers. I am joined by Representative Bill Shuster.

* Every time a consumer uses a payment card--at the mall, at the grocery store, at a gas station, or on the Internet--the merchant is charged a fee. This fee gets divided up three ways--between the merchant's bank, the consumer's bank, and the credit card company. It covers processing fees, fraud protection, billing statements, and other expenses such as system innovations.

* As much as 90 percent of this fee comprises a so-called ``interchange fee,'' which is the payment made by the merchant's bank to the consumer's bank. The percentage is set by the credit card companies, generally Visa or MasterCard, and averages 1.75 percent of the total purchase. In 2008, interchange fees from these two companies totaled approximately $48 billion, an increase of 189 percent since 2001. These fees are ultimately passed on to all consumers in the form of higher prices for goods and services, whether the consumers purchase these items by credit card, check or cash. The average U.S. family paid an estimated $427 in interchange fees in 2008, nearly triple the amount in 2001.

* These interchange fees are set by the credit card companies. The two largest, Visa and MasterCard, control over 73 percent of the volume of transactions on general purpose cards in the United States and approximately 90 percent of the cards issued. Banks that are members of the Visa association are often also members of the MasterCard association.

* Merchants are forced to deal within this system because it is simply not an option to refuse to accept Visa or MasterCard from their customers. They are presented with take-it-or-leave-it options and are not part of the process by which the fees are set.

* The bill creates a limited antitrust immunity for negotiating voluntary agreements. This legislation is intended to give merchants a seat at the table in the determination of these fees. It is not an attempt at regulating the industry and does not mandate any particular outcome. This legislation simply enhances competition by allowing merchants to negotiate with the dominant banks for the terms and rates of the fees.

* It is time to level the playing field for merchants and consumers. I am hopeful that Congress can move to enact this worthwhile and timely legislation.

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