More regulations are being considered to reduce credit card fees…
A new proposal by the Federal Reserve that would create limitations on credit card swipe fees (to 12 cents per transaction) is pitting two of the most powerful lobby groups against each other – the finance and retail industries. Many consumers are unaware that fees are imposed on every purchase they make with a credit card and that they ultimately inflate prices. The House Financial Services Committee recently gave both sides a Capitol Hill forum to address the Fed proposal at the eighth congressional hearing on interchange fees.
Supported by Senator Dick Durban who wrote the provision, retailers view the reduced fee structure as a benefit for consumers by opening opportunities for price reductions. The limit would save merchants and their customers 70% compared to the current rates. “Merchants are very competitive and the lower prices we can give them, the better,” says Mallory Duncan, senior vice president for National Retail Federation, based in Washington, D.C.
Financial services firms said they believe their objections are resonating with the new House majority. “If the financial services industry asked members of Congress to support legislation allowing a regulatory agency to set prices on Slurpees or ceiling fans, solely because certain merchants owned a large share of the market, we would be laughed out of every Republican office on Capitol Hill,” said Sam Geduldig, a former House Republican leadership aide who now is a financial services lobbyist for Clark, Lytle & Geduldig. “But that’s exactly what the merchants have done. The idea that Chairman Ben Bernanke and the Fed would set prices
in any industry is abhorrent to Republicans,” said Geduldig. “Because of that sentiment, we’ve gained a lot of traction on this issue with the new Republican majority and have a lot of momentum as we continue to push for legislative changes.”
A request to suspend the proposal until a federal study can be conducted on its effects came from Visa. Byron H. Pollitt, Visa’s chief financial officers said, “Our objective on the Hill and in our discussions with congressmen and senators is to take a two-year time-out and let’s put this amendment through thoughtful committee hearings and discussions.”
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