[Congressional Record Volume 154, Number 38 (Thursday, March 6, 2008)]
[Extensions of Remarks]
[Pages E318-E319]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        INTRODUCTION OF THE ``CREDIT CARD FAIR FEE ACT OF 2008''

                                 ______
                                 

                         HON. JOHN CONYERS, JR.

                              of michigan

                    in the house of representatives

                        Thursday, March 6, 2008

  Mr. CONYERS. Madam Speaker, today I am introducing the ``Credit Card 
Fair Fee Act of 2008,'' 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 Representatives Cannon, Lofgren, Shuster, 
Weiner, Delahunt, Platts, Welch, Sullivan, Wilson of South Carolina, 
Gohmert, Hall of Texas, Boozman, and Peterson of Pennsylvania.
  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.
  Almost 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 2006, interchange fees totaled approximately $36 billion, 
an increase of 117 percent since 2001. In 2007, the fees amounted to 
$42 billion, about 17 percent since 2006. 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.
  These interchange fees are set by the credit card companies. The two 
largest, Visa and Mastercard, are associations composed of financial 
institutions and are owned and controlled by their bank member-owners. 
Together, Visa and MasterCard control over 73 percent of the volume of 
transactions on general purpose cards in the United States and 
approximately 85 percent of the cards issued. Banks that are members of 
the Visa association are often also members of the MasterCard 
association.

[[Page E319]]

  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. Moreover, the card 
systems operate pursuant to comprehensive operating rules approved by 
the associations' member-controlled boards, but these operating rules 
are not accessible by the merchants.
  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.
  The bill creates a limited antitrust immunity for negotiating 
voluntary agreements and, if necessary, participating in the market-
based proceedings. These market-based proceedings will determine the 
exclusive rates and terms merchants must pay for a 3-year term. No 
other fees, terms or conditions may be imposed on the merchants.
  The rates and terms will be determined by Electronic Payment System 
Judges, who will be appointed by the Department of Justice Antitrust 
Division and the Federal Trade Commission. The judges will apply a 
market standard in their determinations designed to replicate the rates 
and terms of payment that would have been negotiated in a competitive 
marketplace between a willing buyer and willing seller, both of which 
have no market power. The judges will have full independence in making 
all determinations but may consult with the DOJ and FTC on certain 
matters.
  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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