After the GAO Report, Outlook for Interchange Regulation Is Cloudy

The Government Accountability Office's report about interchange came out on Thursday, and every group either for or against the controversial transaction fee has put its own spin on the findings since then. That raises the question of whether Congress will actually take action on three pending interchange bills. Forecasting Congressional action is always a risky business, but with Thanksgiving at hand and other issues, especially health-care reform, likely to command lawmakers' time for at least the rest of the year, the bills probably won't get much attention any time soon. Two of the bills, the House and Senate versions of the Credit Card Fair Fee Act, haven't even had hearings yet even though they were introduced back in June. The House Financial Services Committee held a contentious hearing last month on the third bill, the Credit Card Interchange Fees Act of 2009 sponsored by U.S. Rep. Peter Welch, D-Vt. (Digital Transactions News, Oct. 8). No further action is yet scheduled, however. In a report to investors on Monday, Goldman Sachs & Co. analyst Julio C. Quinteros Jr., who follows the payment processing industry, said the GAO came out with a “relatively fair view” on interchange. “The GAO acknowledged that altering the existing interchange structure would be challenging and (more importantly) would not necessarily be an improvement for consumers,” Quinteros wrote. “While Congressional action could eventually occur, we now see this as less likely, given that consumer benefits are not overwhelming and implementation would be difficult.” A Welch spokesperson would not predict what might lie ahead for Welch's bill, H.R. 2382, but referred Digital Transactions News to a statement the Congressman issued after the GAO released its report. “This report confirms what every small-business owner in the country already knows: credit card fees are killing small businesses,” the statement says. “Ever-increasing swipe fees are driving up costs for merchants, who then pass those costs to consumers. This study shows that curtailing the credit card industry's most egregious practices could lower prices for all consumers.” A spokesperson for U.S. Rep. John Conyers Jr., D-Mich., the chief House sponsor of the Credit Card Fair Fee Act (H.R. 2695), said Conyers had not issued a statement about the GAO report but indicated he may have one later. And a spokesperson for U.S. Sen. Richard Durbin, D-Ill., sponsor of the Senate version of the Credit Card Fair Fee Act, S. 1212, did not respond to a Digital Transactions News inquiry. Conyers's bill is pending in the House Judiciary Committee and Durbin's is before the Senate Judiciary Committee. The GAO, the investigative arm of Congress, confirmed merchants' allegations that interchange expenses have risen over the years. Card issuers receive the interchange revenue ultimately paid by merchants. But in outlining four possible remedies, the GAO said government intervention might not produce its intended results or otherwise would be difficult to implement (Digital Transactions News, Nov. 19).