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Am. Banker Interchange fees are simply business for some retailers
WASHINGTON (8/10/09)--Breaking the line that has been drawn by many retail industry representatives in Washington, a group of retailers have elected to eschew cash transactions by moving to accept only credit and debit cards for purchases. As reported in American Banker, some retailers, including restaurants and, in some cases, airliners, have elected to accept interchange fees as a cost of doing business. One New York-based restaurateur cited the security of cashless transactions as a reason for the switch to plastic purchases. The ease of using only one system for all purchases is another reason for the switch, he said. Retail representatives, as well as nationwide corner store chain 7-11, have spoken out against interchange fees, with 7-11 mounting a petition campaign that is seeking to net one million customer signatures. Merchants have claimed that the “hidden” interchange fee system deprives customers of potential savings, and they are pressing for greater transparency regarding interchange fees. Legislative actions aimed at addressing the interchange issue, H.R. 2695, the "Credit Card Fair Fee Act of 2009," and S. 1212, the “Credit Card Fair Fee Act,” have been introduced recently but have not been discussed by the full House of Senate. H.R. 2695, as introduced by Reps. John Conyers Jr. (D-Mich.) and Bill Shuster (R-Pa.), would allow merchants to negotiate fees with financial institutions via an antitrust exemption. Sen. Richard Durbin’s (D-Ill.) S. 1212 would establish a three-judge panel to mediate fee disputes between financial service providers and retailers. The Credit Union National Association (CUNA) opposes these pieces of legislation, and has asked Congress to, at a minimum, wait for the results of a Government Accountability Office review of interchange fees before taking any action on interchange fees. CUNA and other members of the Electronic Payment Coalition have spoken in favor of the current interchange fee structure, saying that regulating interchange fees would adversely affect consumers, competition, and technological innovation. CUNA has also highlighted the positive aspects of interchange fees, saying that the fees help credit unions cover their expenses and losses while offering merchants a guaranteed source of payment at the time that the transaction is completed.


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