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Credit Card Applications » News » Other » Michigan Representative Looking To Minimize Interchange Fees

Michigan Representative Looking To Minimize Interchange Fees

May 24, 2010 | Updated on May 24, 2010
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The content is accurate at the time of publication and is subject to change.

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.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
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