FMI Lauds Introduction of Legislation Addressing Credit Card Market Power; Bill Would Ensure Competitive Market-Based Outcome

ARLINGTON, VA — June 4, 2009 — The Food Marketing Institute (FMI) praised the introduction of legislation today that would allow merchants to negotiate interchange fees as a group with Visa and MasterCard and the banks that issue those cards.

The bipartisan bill introduced today by House Judiciary Committee Chairman John Conyers (D-MI) and Representative Bill Shuster (R-PA) is titled The Credit Card Fair Fee Act of 2009 (H.R. 2695).

“We salute Chairman Conyers and Rep. Shuster for sponsoring this important legislation. Retailers need the right to negotiate reasonable fees with credit card companies, a fundamental practice in the American free enterprise system,” said Leslie G. Sarasin, FMI president and chief executive officer. “As it stands now, they set the fees in secret, and the cost to merchants and, ultimately, to consumers is skyrocketing.”

The legislation would grant antitrust immunity to merchants of all sizes in order for them to join as a group to negotiate with the largest credit card companies, Visa and MasterCard. The Attorney General will have oversight authority to monitor the negotiation process and any negotiated agreements will be publicly available.

Consumers pay about $2 for every $100 they spend on a credit card to pay for interchange fees — whether they pay by plastic, cash or check — because the card company rules effectively force retailers to build them into the price of all goods and services. The cost of interchanges fees has tripled from $16.6 billion in 2001 to more than $48 billion in 2008, according to the Merchants Payment Coalition and data from The Nilson Report.

The legislation is nearly identical to the Credit Card Fair Fee Act of 2008, which was favorably reported by the House Judiciary Committee in June 2008 with nine Democrats and nine Republicans joining Chairman Conyers in a bipartisan 19 to 16 vote to pass the bill.

Small community banks and credit unions would have the ability to opt out of the antitrust exemption and negotiations if they choose. The bill will maintain traditional antitrust protections to consumers. The legislation would only apply to card systems that process 20 percent or more of the total credit and debit card transactions at the time of negotiation.