Merchants have been complaining for long about the sky high interchange fees being charged by banks that issue credit and debit cards to consumers. While they have been expressing their concerns for a while now, it is in recent times that it is being heard clearly by everyone. The amount of money amassed by these banks annually just through interchange fees is approximately about $50 million a year.
John Conyers, a Michigan representative who also chairs the House Judiciary Committee conducted a hearing on the 2009 Credit Card Fair Fee Act on April 28th, 2010. The hearing mostly concentrated on the high interchangeable fees being charged by the banks and its adverse impact on consumers and merchants.
Following the wages for employees, interchangeable fees are the next highest expenditure incurred by merchants. These fees also exceed the amounts set aside as energy costs and for health care. Based on a statement issued by Representative Conyers, the banks use these fees to cover multiple costs. Only a small amount of this fee goes towards covering the actual transaction cost, a part of this fee is set aside as ROI, a part of it is set aside for reward programs for cards, and the remaining amount goes towards increasing the bottom line of the bank .
As a result of this, merchants end up charging higher prices for their products and the brunt of it is borne by consumers who have to cough up heavy amounts to avail a product of their choice. Only a few consumers who are eligible for reward programs like cash back are the ones who slightly profit from these fees. In order to ensure certain consumers get their money back or get discounted air tickets, there are hundreds of others who pay higher amounts on their cards for various goods. The customers who fall in the latter category do not benefit in any way. The interchangeable fees are just another reason for banks to amass more money.
H.R. 2695 was introduced by John Conyers in the month of June 2009. This is designed to antitrust immunity to merchants to a certain extent. It will enable them to liaise with the banks to negotiate on terms and rates that are in the benefit of all the parties involved.
Once an optimum agreement is reached, it will be applicable to all the participants who use electronic systems for their transactions.