Card-industry representatives reacted with dismay to the House Judiciary Committee's approval yesterday of the Credit Card Fair Fee Act, which would require card networks to negotiate interchange rates with merchants (CardLine, 3/16). The bill now moves closer to the House floor for debate, minus a provision to establish a panel of three federal judges to set interchange rates if negotiations break down. The revised bill specifies the U.S. Department of Justice's Antitrust Division will oversee interchange negotiations. The bill also includes a new amendment prohibiting merchants or card issuers from boycotting payment systems or retailers during negotiations. Merchant acquirers pay card issuers interchange and pass the expense on to their retailer clients as part of the discount rate. The National Retail Federation and other retail-industry groups cheered the committee's action, while payments companies bitterly opposed it. "The retail federation wants all of the benefits of the payment system–guaranteed payment, convenience, risk management, reliability and increased sales volume–but wants to shift their cost of doing business onto the backs of consumers," Josh Floum, general counsel for Visa Inc., said yesterday in a statement. MasterCard Worldwide also opposed the panel's decision to approve the bill. "Enabling merchants to negotiate in coercive and collusive ways will hurt consumers, and the thousands of community banks and credit unions who serve them," the card brand said in a statement, adding: "It's unfortunate that the Judiciary Committee did not listen to the many credible voices that expressed grave concerns about this bill." The American Bankers Association said the bill "still contains provisions that violate fundamental antitrust principles and will ultimately result in less competition and increased costs and reduced benefits for consumers."

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