The Checkout

Uncovering those Hidden Fees

Nancy Trejos

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).

By Nancy Trejos |  June 9, 2008; 9:41 AM ET Nancy Trejos
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"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,"

If we don't start regulating the Banks again, like before Carter, then all of this century, will watch helplessly, while the Banking industry once again brings our country to it's knees.
There is a rush to buy oil and gas commodities, this is what is driving up oil and gas prices now... It is the new bubble! a false claim of supply and demand! With the Banks having no intention of processing the stuff, just holding on to sell at a profit, that you and I will never see, but will pay dearly at the pumps and home use.

Posted by: Ceci | June 9, 2008 7:25 PM

Why is it that legislators understand that fees get passed along to the consumer, but do not understand that corporate taxes (think taxing "obscene" profits) do too?

Posted by: Dom Portwood | June 10, 2008 3:36 PM

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