House committee passes credit card legislation

WASHINGTON The next step in the battle between the credit card industry and retailers occurred yesterday when the House Judiciary Committee passed a bill by a vote of 19-16, which will help to mandate that credit card companies negotiate the fees they charge merchants for electronic transactions. Retailers have been accusing Visa and MasterCard of levying excessive fees.

Card company executives counter that the legislation would simply push more of the cost onto consumers. The so-called interchange fee, which Visa says averages about 1.6 percent, differs depending on the merchant and type of card.

The fees are set by Visa and MasterCard but are collected by the merchant’s bank as part of a larger charge for processing the transaction. The credit card companies say they don’t receive revenue from the fees.

Retailers complain the fees are set collectively by the credit card companies and large banks and are presented to merchants as a “take it or leave it” offer.

Visa- and MasterCard-branded cards account for 80 percent of the credit card market.

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