|
NEWS RELEASE
May 15, 2008
ABA Media Contact: Peter Garuccio
(202) 663-5452
E-mail: pgarucci@aba.com
ABA SUBMITS TESTIMONY ON HOUSE INTERCHANGE BILL
Association strongly opposes legislation that would create a new federal bureaucracy and leave consumers with higher costs and fewer choices
WASHINGTON – In a statement for the record submitted to the House Judiciary Committee today, the American Bankers Association urged Congress to oppose the Credit Card Fair Fee Act of 2008, H.R. 5546. ABA stated that the bill unreasonably interferes with the electronic payment system and represents an effort by the merchant community to have government reduce their cost of doing business at the expense of increased costs and reduced benefits for everyday consumers.
"The bill puts in place a new government bureaucracy – a panel of three government-appointed lawyers – to arbitrarily decide rates and terms for interchange fees and the electronic payments system," the association said in its statement. "This interjects government price controls and interference into a smoothly functioning payment system that works to the benefit of consumers, merchants, community banks, and the economy."
The ABA's statement made clear that benefits merchants receive from accepting payment cards include the ability to maximize sales and consumer satisfaction, payments that are immediate and guaranteed, and the ability to avoid bad check losses, employee theft, check float loss, costs associated with billing and collections, and costs associated with managing and depositing cash.
"When merchants choose to accept payment cards, they pay a penny or two on each dollar for the ability to accept electronic payments," the ABA's statement said. "Retailers, while fully aware of the benefits these services provide, now do not want to pay for it. Rather, they want Congress to intervene to lower a cost of doing business."
The ABA also pointed out that price controls will harm financial institutions of all sizes and that revenue derived from interchange fees is critical to the ability of community banks to provide basic banking services, including debit cards, to the benefit of individuals and local communities. Currently, interchange revenue results in a level playing field on which smaller banks can compete with the world's largest banks.
"There is significant customer demand for community banks to offer card products to complement their traditional bank offerings," the association said. "Limiting the electronic payments system with government price controls would shrink the market to a much smaller number of large card issuers and would reduce choice for consumers."
The ABA further argued that price controls would harm consumers by ultimately shifting the cost of maintaining the electronic payment system to them.
"Government intervention to lower interchange rates will not benefit consumers. In fact, imposing artificial price controls on the free market will interfere with this efficient system and is likely to result in harm to consumers through higher fees and reduced benefits."
In its closing remarks, the ABA maintained that rather than saving money and promoting efficiency, H.R. 5546 would give merchants windfall profits, create a new federal bureaucracy, and take away options for consumers.
# # #
For a copy of ABA’s submitted testimony click here.
For more information on interchange visit www.electronicpaymentscoalition.org
The American Bankers Association brings together banks of all sizes and charters into one association. ABA works to enhance the competitiveness of the nation's banking industry and strengthen America's economy and communities. Its members – the majority of which are banks with less than $125 million in assets – represent over 95 percent of the industry's $12.7 trillion in assets and employ over 2 million men and women.
| 
