Uncovering those Hidden Fees
There are yet more steps being taken on Capitol Hill to change the credit card industry as we know it.
Last week Sen. Richard Durbin (D-Ill.) introduced legislation that would allow businesses to negotiate directly with credit card issuers interchange fees that are charged on every transaction. The card companies currently set non-negotiable fees for covering the cost of a transaction. Consumers end up incurring the cost because retailers include them in their prices.
Durbin's office estimates that interchange fees cost Americans about $42 billion last year. About $2 of every $100 spent on credit cards goes towards interchange fees.
Under the bill, if retailers and credit card providers do not reach a voluntary agreement on these fees, the matter would be brought before a panel of three expert judges appointed by the Department of Justice Antitrust Division and the Federal Trade Commission.
"American businesses and consumers are getting nickled and dimed by the big banks, who end up making billions from these hidden fees," Durbin said. "Interchange fees need to be fairly and transparently negotiated between the merchants and the credit card companies who represent the banks' interests so working Americans do not get shortchanged."
Edward L. Yingling, president of the American Bankers Association, said the "legislation inappropriately inserts the government into the role of setting prices in the private marketplace, undercutting a pricing system that currently benefits consumers, businesses and the broader economy."
"The result will be more federal bureaucracy, less industry competition, and fewer choices - and ultimately higher prices - for consumers, as is always the case when government tries to fix prices," he said.
The House version of this bill was introduced in March by Reps. John Conyers (D-Mich.) and Chris Cannon (R-Utah).
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