Merchants Shift Focus on Interchange By Linking It to the Economic Crisis
Retailers trying to force a cut or cap in card interchange are moving their focus from the House Judiciary Committee, which has seen the issue largely as one of competition and antitrust, to the House Financial Services Committee, which has long claimed the lion's share of oversight authority over the topic.
The Merchant Payments Coalition, a lobbying group that retail associations formed around the interchange issue, announced that it has designed advertising to link the issues of card interchange with subprime mortgage lending and the overall crisis in financial services.
"We don't think we can fix the economic crisis without addressing the incentives behind irresponsible credit card lending by reforming the interchange fee system and addressing this unfair burden on American small businesses and consumers," said Hank Armour, CEO of the National Association of Convenience Stores.
The "six-figure" campaign will run on television, radio, online and print formats in the relevant congressional districts, will name the members of Congress specifically and include information for their constituents to contact their offices, the coalition said.
Representatives targeted include Shelley Moore Capito (R-W.Va.); Travis Childers (D-Miss.); Bill Foster (D-Ill.); Jim Gerlach (R-Pa.); Jim Himes (D-Conn.); Paul Hodes (D-N.H.); Dan Maffei (D-N.Y.); and Walt Minnick (D-Idaho).
"First it was subprime mortgages. Now, another financial storm is on the horizon, and as Congress tries to rein in credit card fees, they could miss the biggest problem, and that is why we're launching this aggressive campaign to reform interchange fees and rules," complained Tom Wenning, general counsel at the National Grocers Association. "As members of Congress work to fix the economic crisis and reform the financial system, they need to address the growing problem of unfair and anticompetitive interchange," he added.
Mallory Duncan, general counsel of the National Retail Federation and a long-time spokesman on the issue, told reporters that the MPC had not forsaken its work with the House Judiciary Committee and still expected committee chairman John Conyers (D-Mich.) to introduce a version of last year's bill again this year.
"They have had some turn over on the Judiciary Committee and that has slowed up the process but we expect the bill to be introduced," Duncan said.
Duncan and the other executives said they felt encouraged by members of the House Financial Services Committee who, the executives said, have broadened their point of view on the issue.
"There is definitely a different political atmosphere here than there was this time last year," said one of the executives.
"The retailers and consumers who pay these fees are not asking for a government bailout, just transparency and a fair process," said Jennifer Hatcher, group vice president of government relations at the Food Marketing Institute. "A 300% increase in seven years in this economy, that is not fair or market based."
Duncan and the other executives acknowledged that they were putting pressure on the Financial Services Committee members because, in part, the committee was likely to mark up a bill further regulating credit card fees.
"The measures they will soon debate address primarily consumer issues," said Armour, "but we believe no bill that seeks to correct credit card fees can be complete without addressing the biggest of all-the interchange fee."
The executives said they were open to seeing legislation on the topic that could move independently or as part of the overall effort to address different card fees.
However, a spokesman for the Electronic Payments Coalition scorned the effort, arguing retailers' latest efforts to persuade members of Congress to cut or cap card interchange reflected their desperation to find traction on the issue.
Trisha Wexler, spokesman for the EPC, which includes credit and debit card issuers, called the retailers' recently announced advertising campaign a "hail Mary pass" and noted that the "strong bipartisan group" of lawmakers who had opposed similar legislation in the last Congress remained in place.
"We haven't seen any indication that there has been a change in legislative opposition to this bill," Wexler said. She also observed that the parties' respective leaderships are against tampering with interchange.