The House Judiciary Committee plans to vote this week on a bill that would require payment card networks to set new interchange rates for credit and debit card transactions, according to retail and payment industry groups. Merchant acquirers pay card issuers interchange and pass the expense on to their retailer clients as part of the discount rate. The Credit Card Fair Fee Act, introduced in March in the House and in June in the Senate, would compel card networks to negotiate interchange rates with retailers. The bill specifies that if negotiations break down, a three-judge panel appointed by the U.S. Department of Justice and the Federal Trade Commission would step in to make a final decision through binding arbitration (CardLine, 3/7). Scott Talbott, senior vice president for government affairs at the Washington, D.C.-based Financial Services Roundtable, a payments industry group, tells CardLine that observers expect the Judiciary Committee to make key changes in the bill when it meets on Wednesday. "We expect that the committee will eliminate the provision for a federal three-judge panel, because that smacks of government price controls, and many lawmakers are uneasy with it," Talbott says. He maintains that the bill contains several "fatal flaws," and he says enactment faces an uphill battle. Merchant groups, including the National Retail Federation and the National Association of Convenience Stores, have mobilized thousands of retailers to contact lawmakers this month in support of the bill. Tom Wenning, senior vice president and general counsel for the Washington, D.C.-based National Grocers Association, says his organization has urged its 1,500 members to bombard lawmakers with phone calls and faxes supporting the bill. "Interchange fees hit store operators hard because they are forced to pay up to 2% per transaction to card networks and issuers, without having any say in how interchange rates are set," Wenning tells CardLine.

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