(March 16, 2010) Interchange regulation of the kind being advocated by national merchant groups just isn’t getting much traction on Capitol Hill. In the latest example, the National Retail Federation on Monday issued a statement saying it was disappointed that U.S. Senate Banking Committee Chairman Christopher Dodd’s much-awaited proposal for regulatory reform in the financial-services industry does not address what the trade group says is the $48 billion in “swipe fees” that merchants pay annually.

Dodd is a Connecticut Democrat who is not seeking reelection. “Chairman Dodd’s bill takes many steps to curb the excesses of the financial-services industry, but the failure to address swipe fees is a glaring omission,” NRF senior vice president and general counsel Mallory Duncan said in the statement. “These fees drive up prices for the average family by hundreds of dollars every year and depress the ability of Main Street merchants to thrive and grow.” The statement later says that, “Chairman Dodd has acknowledged the impact of these fees on consumers in the past, and we hope to see them addressed in the final version of this legislation.”

The statement mentions the three main interchange-regulation bills now before Congress. Two are in the House: the Credit Card Fair Fee Act of 2009, H.R. 2695, whose lead sponsor is House Judiciary Committee Chairman U.S. Rep. John Conyers, D-Mich., and the Credit Card Interchange Fees Act of 2009 sponsored by U.S. Rep. Peter Welch, D-Vt. In the Senate, Illinois Democrat Richard Durbin, the assistant majority leader, has introduced his version of the Credit Card Fair Fee Act, S. 1212.

The trouble is, these bills aren’t moving as Congress grapples with health-care reform and other, more pressing issues. All were introduced last spring, and only Welch’s bill has even had a hearing (Digital Transactions News, Oct. 8, 2009). Washington press reports in late February said U.S. Rep. Barney Frank, D-Mass., the powerful chairman of the House Financial Services Committee, did not plan to have his panel address interchange this year.

Asked if the NRF’s call for Dodd to take up the interchange issue is an acknowledgment that Congress won’t pass any of the pending bills, an NRF spokesperson says by e-mail, “Not at all. We'd like to see interchange move on any vehicle that’s available, and financial-services reform is a logical fit.” The spokesperson adds that the bills have “just been sidelined by health-care reform and jobs legislation, just like everything else in Congress. Chairman Frank’s comments have been overplayed by the banks.” The NRF “hopes to see some movement once the Congressional calendar gets back to normal,” he says. Interchange is the per-transaction charge Visa and MasterCard set for bank card sales that is assessed to the merchant acquirer and paid to the card issuer. Acquirers pass the cost to their merchant clients. Merchant organizations and individual companies such as convenience-store giant 7-Eleven Inc. have initiated big petition drives over the past year to make consumers and Congress aware of how much interchange costs local stores (Digital Transactions News, Dec. 7, 2009).

The NRF has succeeded in getting many people to think of the card networks as utilities that should be regulated, according to consultant and former Visa International executive Eric Grover, who closely follows the interchange controversy. “They are relentless in advocating for government intervention and price controls of card acceptance and/or interchange that they’ve been unable to get in the market,” says Grover, principal of Menlo Park, Calif.-based Intrepid Ventures.

The Democrat-controlled Congress, however, may be past its most opportune time to pass interchange regulation, says Grover. “I’m feeling better now about the chances of Congress not doing something that’s really stupid,” he says.

A spokesperson for the Electronic Payments Coalition, a pro-interchange lobbying group of payment card networks and banks, says by e-mail that Dodd has already “drafted and approved aggressive legislation on credit card issues” (a reference to the Credit CARD Act that Congress passed last year, which imposed new regulations on issuers), and worked to get the Government Accountability Office to study the interchange issue. “The Chairman knows the difference between consumer issues and a business trying to leverage the legislative process for private gain,” the spokesperson says.