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For years the government has taken a Laissez Faire approach to Interchange Rates, but recently the U.S House Judiciary Committee has begun heavily campaigning to control them. Proposed legislation (HR 5546 The Credit Card Fair Fee Act) would require Visa and MasterCard to negotiate Interchange fees directly with merchants. This would put a stop to a credit card processing company’s ability to set non negotiable fees. If the merchant and the credit card company are not able to come to terms, then they would have to submit their final offers to binding arbitration by a three judge panel.

If this new bill is passed by Congress, it is could potentially create more of a mess and ultimately higher costs. I am sure there are millions of businesses in the U.S alone, and if it passes, Visa and MasterCard are going to be getting a lot of calls from people looking to negotiate their fees. This means they will have to hire more staff to take the calls, and possibly even create systems to track all the various negotiated rates. So will this bill help the situation, or only put a band aid on what merchants believe to be an issue? Fees collected generally go to rewards programs, credit losses, and operating costs.

There are a total of 23 Bills regulating the card processing industry; some of the key ones are as follows:

Continue reading "Should The Government Be Involved In Interchange Legislation?"