NEW YORK – As the conversation on excessive swipe fees continues in national and local legislatures here in the United States, other countries are making moves to limit the fee-setting ability of credit card companies. The Canadian government’s move last week to strengthen its Code of Conduct for the payment card industry and the European Union’s approval in March of rock-bottom interchange rates for credit and debit cards has observers wondering if more regulation is in store for the U.S. merchant-acquiring industry, according to an article by Jim Daly on DigitalTransactions.net this week.
According to Daly, other than the price caps put in place by the Durbin Amendment in 2010, the U.S. payment-card industry has largely escaped the type of regulation affecting cards in other countries. All may not be lost, however. “There are plenty of ideas for U.S. lawmakers and regulators to consider should they decide to increase their scrutiny of payments issues,” Daly writes.
A 2014 survey by the Federal Reserve Bank of Kansas City identified a growing trend by governments to intervene in the payment card industry to correct a host of perceived problems, including allegedly overly high interchange rates and restrictive network rules for merchants. The survey documented 38 countries where public authorities intervened in or began investigations of networks’ interchange or merchant-service fees. A few such actions began in the 1990s, but most started in the 21st Century, with seven beginning in 2010 or later.
That said, writes Daly, “Few believe Congress intends to extend Durbin-like regulations to credit cards. The Durbin Amendment forced Congress to choose between two key constituencies, retailers, who generally supported the restrictions, and banks, which strongly opposed them, and lawmakers don’t want a repeat.”
More recently, several states — including Colorado, Nebraska, and Arkansas — have suggested exempting merchants from paying interchange on the state and local tax portion of payment card sales. The Colorado bill was killed in early March, but the potential for card-pricing regulations in states remains.