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| House Subcommittee Launches Interchange Hearings |
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A House Judiciary Commitee task force today heard from witnesses on both sides of the contentious interchange issue as it began public work on legislation that could put federal regulators in chanrge of monitoring and perhaps controlling interchange fees. Witnesses at the hearing included Thomas L. Robinson, Vice President of Regulations, National Association of Convenience Stores; Joshua R. Floum, General Counsel and Corporate Secretary, Visa Inc.; Steve Cannon, Chairman, Constantine Cannon, LLP; Joshua Peirez, Chief Payment System Integrity Officer, MasterCard Worldwide; John Blum, Vice President of Operations, Chartway FCU, Edward Mierzwinski, Consumer Program Director U.S. PIRG. "Government regulators would do a worse job setting interchange rates to maximize output and encourage innovation than Visa does," Floum told members of the Task Force on Competition Policy and Antitrust Laws. "A non-market driven reduction in Visa’s interchange rates would drive issuers and cardholders to American Express, or other potentially more expensive and lesser utility networks, and thereby simply re-allocate output on the Visa system to another network. Price controls would thus have the perverse effect of driving transactions to a payment network that is generally more expensive for retailers." Robinson, representing convenience stores owners, charged that interchange rate setting violates antitrust laws. "While they have reached for a fig leaf to cover their illegal activity," he argued, "banks continue to agree to charge the same interchange fees and refuse to compete. I’m sure lawyers can explain this better than I can, but in my view this is simple. Banks, using the cover of Visa or MasterCard, agree to charge the same interchange fees. That is against the law and something must be done." ETA will update coverage of the hearing when it is completed. |
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