AG candidate Nava to tackle credit card interchange fees
Pedro Nava (D)
SACRAMENTO, Calif. (Legal Newsline)-Rising credit card interchange fees have landed in the crosshairs of a California lawmaker running for state attorney general.
State Assemblyman Pedro Nava of Santa Barbara announced Monday that the Assembly Banking and Finance Committee he heads will be investigating so-called interchange fees that credit card companies charge businesses and consumers in the course of transactions.
"With the price of gas at more than $3 a gallon, credit card companies and their banks who sponsor gasoline credit cards are collecting as much as 8 cents per gallon for interchange fees," Nava said. "We need to examine our options to lower these fees and pass the savings on to California's struggling consumers."
The credit card industry collects about $5 billion from credit- and debit-card fees charged in California, said Nava, D-Santa Barbara.
Most of the interchange fees in the state are collected by Visa Inc. and MasterCard Inc.
The fees typically include a flat transaction charge plus a percentage of each purchase. Last year, American merchants paid an average interchange rate of 1.82 percent per transaction, according to the Nilson Report, a Carpinteria, Calif.-based newsletter that tracks the industry.
The California Retailers Association, which backs Nava's effort, says the way interchange fees are charged is fundamentally unfair.
"Most consumers don't know that every time they swipe a credit card, they help drive up the cost of consumer goods," said CRA President Bill Dombrowski. "This particularly impacts consumers who don't have or use credit cards because Visa and MasterCard rules effectively require that everyone pay the credit card price even if they are paying with cash, check, debit card or even food stamps."
Nava noted that there is legislation pending in Congress aimed at addressing interchange fees.
U.S. Reps. Peter Welch, D-Vt., and Bill Shuster, R-Pa, have introduced HR 2382, the Credit Card Interchange Fees Act of 2009.
On the Senate side, Richard Durbin, D-Ill., and Christopher Bond, R-Mo., have introduced amendments to HR 627, the Credit Cardholders' Bill of Rights Act of 2009, that allow for consumer discounts for debit cards and less expensive credit cards, and for greater transparency concerning hidden interchange fees.
For his part, Nava said he plans to introduce an assembly resolution before the end of the year supporting the passage of federal legislation aimed at creating "a fair and transparent environment for the negotiation of competitive (credit card) rates and terms."
From Legal Newsline: Reach staff reporter Chris Rizo at email@example.com.