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Senate Passes Amendment on Credit Card Swipe Fees
Late last week, the United States Senate overwhelmingly passed an amendment to the in-progress bank reform bill which could change the rules of the road for credit card swipe fees. The amendment would gives the Federal Reserve the ability to monitor and regulate the fees that credit card companies charge merchants and the power to ensure that the rates are "reasonable and proportional to the actual cost incurred."
The New York Times notes that the amendment is part of the bank reform legislation yet to be passed by the Senate. If the larger bill does pass, it must then be reconciled with bank reform legislation from the House of Representatives.
Having the Federal Reserve become involved with monitoring credit card fees is certain to be a point of debate. Many people believe that the Federal Reserve played a role in our current financial crisis and will be more than uneasy with giving it greater power. Proponents of the bill believe that it will result in lower rates and a fairer system for everyone.
For many small businesses, however, the need is clear. As discussed in this blog last year, the total amount in interchange fees paid by merchants has skyrocketed over the last several years, up to a reported $42 billion in 2008.
As reported by the Times, the amendment to the bank reform bill would also give merchants the right to set minimum and maximum payment amounts for any form of payment accepted, and the right to offer discount to customers paying with cards from other networks.
Currently, merchant agreements prohibit merchants from requiring minimum amounts or passing on swipe fees. Many consumers see allowing minimums and maximums as a positive step, but others are opposed, as this will likely lead more merchants to post higher minimum purchase amounts, requiring consumers to carry more cash.
Related Resources:
- MasterCard fights for card fee revenues (Reuters)
- Senate Bill to Curb Credit Card Swipe Fees Passes (Consumerist)
- Senate May Break "Price Fixing" On Credit Card Swipe Fees (Consumerist)
- Small Business Credit Card Rates Hiked and Limits Slashed; Prospects for Reform? (FindLaw's Free Enterprise)
- Payback: Card Lawsuit Payout to Retailers (FindLaw's Free Enterprise)
- Soaring Interchange Fees Charged by Credit Card Companies, Targeted by Merchants (FindLaw's Free Enterprise)