Click here for link to the November 6, 2008 “Small-Business Owners Lobby to Cut Credit Card Fees” New York Times article by JANE BIRNBAUM
[source: NYTimes, Thursday, Nov 6]
Small business owners are lobbying for new legislation in hopes to cut mandatory fees owed to banks each time a consumer uses a credit or debit card, reports The New York Times.
The legislation would urge banks to negotiate fees with merchants. Some business owners are seeking class-action status for litigation claiming antitrust violations by banks and the MasterCard and Visa card networks, says the article.
A merchant card payment has two parts: an interchange fee, which includes an average 1.7 percent of the sale price and a flat per-transaction fee, and a separate fee that goes to the merchant’s bank, explains the article. In 2007, merchants paid $61.56 billion in electronic payment fees, up from $48.58 billion in 2005, according to the Nilson Report, a payment systems industry newsletter. The report estimated that lenders took in 82.5 percent of those dollars.
Mitch Goldstone, owner ScanMyPhotos.com,Irvine, Calif., who blogs about interchange fees at www.WayTooHigh.com, decided to challenge the fees in 2005 after learning that fees on reward cards were going up, says the article. Those representing the credit card industry believe merchants ultimately benefit from the fees.
In July, the House Judiciary Committee, with bipartisan support, passed legislation that requires banks and merchants to negotiate interchange fees, says the article. Small banks and credit unions argued that fee reductions would take away needed income.
Ronald Mann, a law professor at Columbia University and a credit specialist, said he expected that there would be “a tremendous push in Congress in 2009 to adopt important credit card reforms” because of the increased sensitivity to banks’ lending practices.”