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The Electronic Payments Coalition, whose members include the major card brands and issuers of their products, is urging Congress to oppose interchange legislation, and it is using a link to a popular video-sharing Web site to propagate its message. In a YouTube video posted on Electronic Payment Coalition's Web site, a narrator uses illustrations on a white board to explain to viewers how card transactions work, using a $10 American flag purchase from a small store as an example. The merchant's bank collects a 20-cent discount fee on the transaction from the merchant, and the card issuer takes 16 cents of that as interchange, the narrator explains. The card-issuing bank takes on all the risk of any fraud or other problems that might occur with the transaction, he adds. "But these big-box merchants aren't happy with the system, and they're currently lobbying Congress to pay less," the narrator says. "So what would happen if they got their way? Your bank or credit union could start charging you more to make up for money lost. And if that happens, do you really think these big-box stores would start charging you less? I don't think so." Or financial institutions could stop issuing credit and debit cards, leading to fewer transactions, small businesses closing and consumers with fewer businesses from which to choose, the narrator warns. The latest version of card-acceptance legislation, a interchange bill reintroduced last week by House Judiciary Committee Chairman John Conyers, D-Mich., would remove antitrust hurdles to let merchants enter into collective-bargaining agreements with banks when setting interchange rates (CardLine, 6/5).

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