As Interchange Bill Languishes, Supporters and Opponents Get Creative

Lobbying over legislation that would change the rules governing the credit card processing system is continuing unabated—and a bit offbeat.

David Baumann


Nov 29



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David Baumann

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David Baumann

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Interchange fees

Consider this.

--An opponent of the measure has compared a key sponsor of the Senate bill to a pig.

----A senator pushing the legislation has gone to work at a convenience store to demonstrate the need for the bill.

The legislation, S. 1838, would require the Federal Reserve to issue rules ensuring that large credit unions and banks currently using the four-party card processing system be required to use at least one affiliated network, in addition to Visa and Mastercard.

Financial services trade groups, including CUNA and NAFCU, argue that the legislation would be costly and could result in the elimination of credit card rewards programs. They contend that when a similar interchange system was instituted for debit cards, retailers failed to pass the savings onto consumers.

Retailers say that the current system rewards Visa and Mastercard, providing them with a monopoly that allows the companies to set fees without competition.

And the lobbying over the bill has been furious.

Porker of the Month

Each month, Citizens Against Government Waste, a conservative watchdog group, names a “Porker of the Month.” The name plays on the term “pork-barrel politics,” which refers to special-interest spending on behalf of a lawmaker’s campaign contributors or constituents.

The group named Sen. Richard Durbin, D-Ill., the primary Democratic sponsor of the measure, its November porker “for trying to take away everyone's credit card benefits,” the group stated on its website.

The group charged that Durbin’s bill would “take away benefits used by tens of millions of consumers across the country, including travel and loyalty reward programs.”

CAGW President Tom Schatz said, “Sen. Durbin’s legislation would significantly increase the government’s control over a competitive and popular marketplace. If enacted into law, it would double down on harmful policies, damage the economy, and be a disaster for consumers. For trying to take away credit card benefits and rewards, Sen. Durbin was an easy choice for this month’s Porker.”  

Government’s Burden

Durbin most likely would argue that he is trying to save taxpayers’ money.

In fact, he has asked the Government Accountability Office to assess the cost of interchange fees paid by the federal government.

“Market competition typically helps keep fees like these in check, but Visa and Mastercard have structured their networks to avoid competitive market pressures on their fees,” he wrote in a letter to Comptroller General Gene Dodaro earlier this month.

He added, “This puts an undue burden on taxpayers, consumers, and small businesses, leading to a necessity for Congress to enact legislation to enhance competition and choice to reduce excessive fees.”

He said that interchange fees paid by the federal government amount to an estimated $240 million a year.  

Casey’s General Store

As part of his own effort to garner attention to the bill, the primary Republican co-sponsor, Sen. Roger Marshall of Kansas, earlier this month toured the Topeka location of “Casey’s General Store,” which has 190 stores in Kansas.

Marshall’s office said the senator met with employees, shadowed the store manager and even waited on customers.

The senator’s office estimated that Casey’s has paid an estimated $17 million in swipe fees this year.

 “Credit card swipe fees are inflation multipliers crushing our small businesses and forcing them to raise their prices on consumers,” Marshall said.

The future of the legislation remains uncertain. Durbin and Marshall have been trying to attach it to the annual defense authorization bill that is now before a House-Senate conference.

However, key House Republicans oppose the measure. If it is not enacted this year, it could still come up next year.

And it remains to be seen what stunts people on either side of the issue will dream up in 2024.

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