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The House Judiciary Committee today voted 19-16 to approve a bill that would compel card networks to negotiate new interchange rates with retailers. The Credit Card Fair Fee Act, introduced in the House in March and in the Senate in June, now moves to the House floor for debate. The committee also adopted a compromise amendment to the original bill, scrapping a provision to establish a panel of three federal judges that would have made a final decision on interchange rates if negotiations broke down between card networks and retailers. Merchant acquirers pay card issuers interchange and pass the expense on to their retailer clients as part of the discount rate. Interchange can be as high as 2% of the sale on rewards card transactions. The Merchants Payments Coalition applauded the committee's vote and said in a statement: "Today's victory is a landmark decision that reaches far across party lines in reining in Visa and MasterCard's stranglehold over merchants and consumers alike." MasterCard Worldwide yesterday issued a statement announcing that more organizations are taking a stand against the bill, including Nordstrom Inc., the Black Chamber of Commerce and the Southern Christian Leadership Conference. According to MasterCard's statement, Nordstrom Executive Vice President Kevin Knight told the Judiciary Committee in a recent letter that the retailer prefers "market competition to regulation." MasterCard added that it sees no need for government intervention in card interchange rates. "Such policy decisions in the past have proven to be unworkable, unpopular and detrimental to the free-market economy," said Noah J. Hanft, MasterCard general counsel and chief franchise officer.

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