Skip to comments.PIERCING THE VEIL: CANNON, CONYERS INTRODUCE LEGISLATION TO SAVE AMERICAN FAMILIES BILLIONS
Posted on 03/06/2008 2:42:54 PM PST by hardknocks
WSAHINGTON DC Congressman Chris Cannon (R-UT), along with Judiciary Chairman John Conyers (D-MI), today introduced the Credit Card Fair Fee Act (HR 5546) to address the anti-competitive aspects of credit card interchange fees and save American consumers and American families billions every year. Upon introducing this legislation, Congressman Cannon said,
Free market capitalism is the most successful economic system the world has ever witnessed. Bedrock principles of that system include transparency and competition. The current system of setting fees that merchants pay for credit card transactions is anti-competitive and secretive. This bill does not set prices. Instead, it would require that fees be set in a transparent manner so other companies can compete for business and consumers would not pay artificially high rates.
Cannon continued, In the end, credit card companies should set whatever fees the market will tolerate. This bill is a win for consumers, for retailers, and for the credit card industry which will benefit from competition.
In closing, Congressman Cannon said, This is a complicated issue. This bill may not be the final answer, but societys interest in this is so great that we hope all interested parties will come to the table.
For more information, please visit: http://chriscannon.house.gov/ChrisCares/CreditCards.htm
For a graphical depiction of how this bill would mandate negotiations, please visit: http://chriscannon.house.gov/UploadedFiles/ccflow.pdf
Each year, consumers pay billions of dollars in hidden fees that never appear on their monthly statements. Those fees are called Interchange fees.
Credit card companies and their banks charge them to store owners, businesses, or anyone else anytime a credit card is used to make a purchase. As much as $2 of every $100 you spend goes to interchange companies or the banks behind the card.
Last year, more than $36 billion in interchange fees were collected, up 17 percent from 2005 and 117 percent since 2001. The average American family is now paying more than $300 a year in credit card interchange fees. Retailers then pass along the credit card interchange fee to consumers in the form of higher prices. The credit card interchange fee increases the price of everything consumers buy, even those who don't use plastic and choose instead to pay for their purchases in cash or by check because retailers are not allowed to offer lower prices for cash or debit transactions because of their agreements with Visa and Mastercard.
For example, with the price of gas at more than $3 a gallon, credit card companies and their banks are collecting as much as 8 cents a gallon in interchange fees. Americans are paying the highest interchange fees in the world, an average of two percent, compared with less than one percent in most other industrialized countries.
Credit Card fees have a complex pricing structure, which depends on the card association, the type and size of the merchant, the type of credit card and the type of transaction. Convenience stores, supermarkets, warehouse clubs and other merchants that sell low-margin items may have lower rates. Hotels and car rental businesses have higher rates. Among transactions, those with a credit card have higher rates than those with a signature debit card, whose rates are in turn higher than PIN debit card transactions. Sales that are not conducted in person, such as over the phone or Internet, have higher interchange rates, apparently due to their increased risk of fraud.
Simple I don’t have a credit card. I use my debit card and just spend what I realistically can.
It is a free market. I chose not to use them.
Sorry, this is stupid government regulation.
You miss the point. Retailers are being charged for the privilege of accepting credit cards in the US more than any other country. The true cost is passed on to consumers be it cash, credit or debit.
well, most people find credit cards useful.
I use cash and debit.
It’s not the purpose of the government to think for the people or play nanny. These are adults, if they’re stupid, that’s their problem.
Sounds like “anti-boilerplate” legislation. So far, OK by me.
Surprisingly it looks like there is bipartisan support on this issue.
Yeah, somebody's making money on this and government doesn't think it's getting a big enough cut of the action.
I think that’s why people are jumping on this.
Well that's nice for you, but what about those of us dumber than a bowl of mice who go out and spend with shocking irresponsibility, the thought of actually making good on the debt we run up never occurring to us, buying un-needed and un-wanted items on a whim or to satisfy some momentary impulse.
What about us I say!
There must be some way for us to pass our burden off to the responsible members of society, and Cannon and Conyers are just the folks to do it. Control the credit card companies fees, have them raise the rate they receive from retailers and pass the increase along to everyone.
It's only fair.
If what I just wrote made you sad or angry,
it was probably just a joke.
And if it weren’t such a valuable service, no one would bother to pay for it.
Consumers are charged more for Milk in the US too. Maybe more regulation in that industry would help consumers too. Oh wait, never mind...
Gosh, so sorry..guess I am just soooo lame. I use credit cards and when I was in a crunch they helped a lot. Guess I am just not so brilliant as those who “NEVER” use credit cards.
Reminds me of the “ I never watch TV “ snobs.
Ok, now flame me.
The merchant effectively pays the same interchange fees on your debit card transactions.
No - I think you’re missing the point. The government isn’t getting anything out of this - the point is that the credit card companies have been taking huge bites out of small businesses’ profits for years which has forced them to raise prices which has hurt consumers. The point of this is to rein in their to this point unregulated practices. You have to admit that the credit card companies have a tendency to go overboard with their fees.
A credit card is optional, people sign a contract that spells out the terms, and the people choose to spend the money. Now some government bureaucrat wants to “save the stupid people” of this nation with another law. Dont confuse this with all the other spotted owls, whales, or planet were trying to save. Democrats save the environment, Republics the economy and BOTH are for the middle class. Politicians are always on the lookout for some theme that hits the cord of the masses, no matter how stupid.
But thank God they opened up with the statement that they believe in capitalism and free trade, yadda, yadda, yadda. Thats like saying I have a friend that’s black but........ I have a friend that’s a Jew, but....... Give me a break, don’t piss on me and tell me it’s raining. It’s more government intrusion, more regulation, more controls on financial activities.
I’ve worked with several companies regarding this sort of thing. When we implemented a debit card processing project, part of our testing (which found serious bugs, btw) was to verify we were being charged the correct interchange fees for the correct transactions.
Heck, the reason we were adding the specific debit functionality was because the fees are much lower on debit cards.
Card-not-present debit transactions are SERIOUS money savers for utilities, schools and government agencies. For large companies, it can save millions EVERY YEAR.
Any business is perfectly free to NOT offer their customers credit card privileges. Cash only. Or check only. Or both.
>>Gosh, so sorry..guess I am just soooo lame. I use credit cards and when I was in a crunch they helped a lot. Guess I am just not so brilliant as those who NEVER use credit cards.
Reminds me of the I never watch TV snobs.
Ok, now flame me.<<
Heh,heh. I haven’t had TV since ‘97. But if I were a sports fan it would not have been possible.
We all have our own temptations to deal with. A promiscuous heterosexual male has nothing to be proud of compared to a flaming practicing homosexual cross dresser. They are both giving into their particular temptation/sin.
The retailer should be “allowed” to charge more for credit card transactions.
The current law that prevents this is illegal, so quotes around allowed.
From the linked pdf page, it appears that this bill mandates that one collective bargaining agreement over fees between all merchants and all credit card companies, to be determined by the judiciary if no “voluntary” agreement is forthcoming.
Think about the games that would be played under such an arrangement. There’s nothing free market or competitive about this; it’s literally classic fascist economics, straight out of the 1930’s. I’ve always known that Conyers was a liar and an idiot. It now appears that Cannon is a liar and an idiot, as well.
I’m amazed at how many here didn’t read the article. The ones currently getting screwed are those that pay cash, write checks, or use atm cards. They are paying for the credit card fee so folks can use credit cards. I’m also amazed at the number of folks who seem to think using a credit card is solely related to using credit or running into debt. You can pay it off every month.
In today’s world, while that may be technically true, in all reality you would kill the business. Could you imagine telling a gas station in 2008 to just deal with it and not take credit cards? It can’t be done, especially if they’re not part of a chain.
Not very wise money management. It's better to use a credit card and just spend what you realistically can, paying it off each month. That way you get the protection of the Fair Credit Billing Act (law)*.
I got a $2,500 computer for free when a company tried to rip me off. Had I used a debit card, I would have been out of luck. (Plus, I would have been fighting to get my own money back, rather than fighting against them trying to fraudulently have me turn over money.)
Also, liability protection from fraudulent use of a card is different for debit cards (under The Electronic Fund Transfer Act*).
But that's okay....suckers who fall for the debit card scam make banks a LOT of money (why do you think they advertise them so much?) And if suckers are paying the extra fees with limited protection, then there's less of a need for banks to charge me as much to be competitive.
*Of course, IANAL, and this isn't legal advice. :-)
Friggin asshats, the whole lot of them!!
Free market capitalism is the most successful economic system the world has ever witnessed. Bedrock principles of that system include transparency and competition.”
Yes it is.
And the idea that government regulation can improve on market-oriented solutions that evolve naturally in the free enterprise system are as appealing, mythical and realistic as unicorns.
In before the resident Presumptuous Ones jump in with “I pay my balance in full every month!”
Quite true, it is all a voluntary process. Also dont forget the companies are also offering collateral free loans that they risk being stiffed on. The fees they charge heps cover these losses. Cut the fee they charge and something is going to give, most likely they are going to cut back on the risky loans they make, Women, Minorities and Children hit hardest, thanks Conyers.
There are fees the merchant must pay when you use your debit card also.
The legislation is stating it is quite ok to charge the fee, just make all fees associated with transactions transparent so that the market is competitive.
I have no problem with this at all.
We put everything we can on our AMEX that we get cash back on. We pay it off at then end of every month. If they don’t take AMEX and we have to use them when we present our debit card we ALWAYS tell them credit. That makes the transaction fee go to the store, if you say debit some stores will automatically charge you with a transaction fee. Seeing it less and less, but also by opting for credit (on the debit card) you do not have to enter your PIN and there is less chance of someone seeing you enter it.
That's because you read (and understood) the article. What's wrong with you anyway? ;-)
From the link:
The courts have decided that Visa and MasterCard have market power. In fact, a report from the Kansas City Federal Reserve has concluded that merchants cannot realistically refuse to accept Visa and MasterCard.
Bargaining power is so overwhelmingly tilted to Visa and MasterCard that they will not negotiate with merchants. Theirs are take-it-or-leave-it offers. Merchants can talk directly with American Express and Discover to negotiate, but Visa and MasterCard will not talk to merchants.
Both the Second Circuit Court of Appeals and the U.S. District Court for the Eastern District of New York have in the last few years found that Visa and MasterCard have market power. The Second Circuit (United States v. Visa U.S.A., Inc., 344 F.3d 229 (2d Cir. 2003)) found that Visa and MasterCard had illegally prohibited their banks from issuing American Express and Discover cards in violation of the antitrust laws. This illegal behavior demonstrated the dominance of Visa and MasterCard over their member banks and showed that American Express and Discover do not have a sufficient portion of the market to counter this dominance. Faced with this dominant market position, merchants are given no opportunity to bargain with Visa and MasterCard. This is consistent with the finding in a recent report by the Kansas City Federal Reserve that concluded merchants cannot realistically refuse to accept Visa and MasterCard. F. Hayashi, A Puzzle of Payment Card Pricing: Why Are Merchants Still Accepting Card Payments? Review of Network Economics at 172 (March 2006) http://www.rnejournal.com/articles/hayashi_march06.pdf. It is also consistent with the result in the merchants litigation against Visa and MasterCard in the Eastern District of New York which resulted in one of the largest antitrust settlements in U.S. history based upon Visa and MasterCard using their market power to tie credit and debit products. See In re Visa Check/Mastermoney Antitrust Litigation, 2003 WL 1712568 at *3 (E.D.N.Y. April 1, 2003).
American Express provides a useful contrast to Visa and MasterCard. American Express does not have market power in most merchant categories and two things happen first, retailers do have some negotiating power and secondly, if they do not like the rates, in many markets, they can choose not to accept the card. In contrast, the market power of Visa and MasterCard prevent them from allowing merchants the ability to negotiate and it also effectively forces merchants to accept the card at any price if they wish to remain in business.”
Judging from the pdf link provided, this bill will end whatever competition now exists. Fees will be set by the courts or their threatened action. The bill is totally anti-competitive.
Next, I suppose, Congress needs to take a look at those pesky ATM fees that banks charge...
Do you have a link to the actual legislation?
You're selling, I'm from the government and I'm here to help you and John Conyers has a hand in it?
BS. I'll admit that this won't bother me much one way or the other bacause I use "cash", such as it is, unless it's a dire emergency.
Yeah, temptations. Guess I am sensitive cause i am mad at myself for getting into the credit card thing....yeesh. So frail are we humans.
My doggie is so laughing at me now! she is laying on her back, paws kicking in the air...howling at my vulnerabilities cause I am “The Human” ( so smart)..Ha.
Wanna talk about frail? In two weeks I make the last of SEVERAL YEARS worth of $900 monthly payments to the IRS!!!
Yeah, It’ll be party time at the Robroy mansion...
Yeah HOO! congratulations. Good for you!
The response to your reply depends on certain factors.
What's your doggies credit rating?
Duh! It’s election year. Beware!
Our congress critters will be falling all over themselves to show they are “working for us” (and in bipartisan fashion, no less).
Somehow, I doubt it.
You mean there isn't such a thing as a free lunch?
You mean Hillary-care won't be free? Next you're going to tell me that granting no permits to build nuclear power plants for 25 years, ANWR, and setting up ridiculous bureaucratic hurdles to obstruct the building of refiners for many years has consequences too?! You're crazy!/sarc
There isn’t any competition now. It’s Visa and Mastercard or you go out of business.
You are affected whether you use cash or credit. The costs associated with these fees are passed onto the consumer by the merchant, so the price of the product is adjusted for everyone, not just the folks who use credit.
So, you want government to set the price, de facto or de jure? What a conservative you are! What a free market advocate!
Uh no. This legislation wants the fees to be transparent so that there can be actual competition.
Hidden fees? Is that a conservative policy now and I missed a memo?
No kidding? You mean I have to help support all the blood sucking leeches of society? Wow, woulda thought?
Thank goodness John Conyers, and all the other do-gooders in congress are there to save me from my plight, what would I do without them there to save me from myself?
i agree whole heartedly debit card use is moronic...why not use the other guys’s money for 30 days free....? duh. ALSO
i try to buy things at the top of the credit card billing cycle that way i am able to use a product a long long time
and if it’s defective i call the c c company and tellem im protesting the purchase....does all this make sense to everybody?
Want transparency? Then just mandate that current and new fee agreements are made public. That’s NOT what this bill does, per the linked pdf. This bill sets fees for all merchants and all credit card companies via judicial intervention OR the threat thereof. In this area, at the very least, the idiots Cannon and Conyers want classical fascist socialism, wherein there’s NO COMPETITION and the state determines the relations of production.