Colorado and Illinois legislators passed state bills to curb credit and debit card fees that Visa, Mastercard and their issuers impose on merchants, but both bills have suffered setbacks this year. Neither has taken effect, with one vetoed this month and the other postponed.
On another front in merchants’ battle against card fees, a federal court settlement between the card networks and merchants that was expected to offer increased relief from the fees remains unpopular with many plaintiffs. It was approved this month amid protest.
The developments at the state and national levels point to what seems to have become an industry truism: The battle between card companies and merchants will persist, with the latter decrying Visa and Mastercard’s control of the market.
The 20-plus-years war over the interchange and network fees retailers, restaurants and other merchants must pay every time a consumer swipes a card seems destined to rage on, despite merchants losing the latest rounds this month.
As evidence of the ongoing discontent, take the statement of the National Restaurant Association’s chief advocacy officer, Sean Kennedy, after a federal judge approved a renegotiated pact between card company defendants and their merchant adversaries this month.
“This settlement does little to address the problem of the anti-trust lawsuit that got us here and doesn’t provide true relief to the small business restaurant owners who are struggling to manage swipe fees,” he said of the settlement.
And even though the governor of Colorado vetoed a bill that would have reined in fees, he showed sympathy for merchants’ cause. “I have been open to the core concept of this bill and the problem it is trying to solve,” Colorado Gov. Jared Polis, a Democrat, said in a lengthy letter, offering support for merchants. “There is far too much friction in our transaction ecosystem.”
In Illinois, despite support for a new law from Gov. JB Pritzker, the legislature has twice postponed the law it passed in the face of federal litigation, and even though the law achieved a partial court win. It has also encountered opposition from the Trump administration this year.
Those aren’t the only setbacks the anti-fee merchants have endured. They’ve also failed so far this year to push the Credit Card Competition Act through Congress, despite President Donald Trump coming to the aid of the bill backed by Republican Sen. Roger Marshall.
All the defeats point to one conclusion. Visa and Mastercard, with their considerable trade group lobbying muscle, have successfully locked arms with the banks that issue their cards to beat back adversaries who take aim at their profitable businesses.
Even a Federal Reserve proposal to reduce fees the merchants can charge for debit card transactions has been inexplicably slow to take effect, with little explanation from the central bank as to the reason.
But all is not lost. There may very well be an appeal from the Illinois attorney general that pushes back on the federal court ruling that has prompted a delay of the Illinois Interchange Fee Prohibition Act.
And there’s still a chance that Sen. Dick Durbin, the Illinois Democrat who has been the champion of reduced interchange fees for decades, will make another stand for the Credit Card Competition Act before his congressional career ends in January.
The clash over network and interchange fees most assuredly will go on.
