WASHINGTON -- Congressional scrutiny of interchange fees continues to heat up. There is renewed congressional scrutiny of other credit card practices involving hidden charges and excessive fees, reports The Politico, a publication dedicated to issues on Capitol Hill.  

In March, Rep. John Conyers Jr. (D-MI), chairman of the House Judiciary Committee, and Rep. Chris Cannon (R-UT) introduced the Credit Card Fair Fee Act of 2008. The bill would force the card companies to negotiate with merchants. If an agreement isn’t reached, then a panel of three judges would set the interchanges fees based on a “hypothetical perfectly competitive marketplace.” 

Sen. Richard J. Durbin (D-IL) is expected to introduce a Senate version of the bill, lobbyists say, and Conyers will hold another hearing about the issue on May 15. 

The interchange fees are set by the credit card associations — dominated by giants Visa and MasterCard — and have a complicated pricing structure based on the type of card, the size of the merchant and the type of transaction. On average, they make up 1.75 percent of the total purchase.

While that percentage seems low, the total amount of fees paid to banks that issue credit cards is staggering. Last year, credit card companies collected $42 billion in interchange fees, up from $36 billion in 2006. 

And as consumers have started to use cards more frequently — completing 10,000 transactions per second, according to credit card companies — the money brought in by fees has skyrocketed.

For retailers, the fees can feel like an unfair markup. Small retailers, gas stations and supermarkets complain they pay more in fees than they earn because of their tight operating margins. 

The struggling economy only exacerbates the retailers’ frustration. As retailers face a slowdown in consumer spending, credit card companies rake in record profits. In March, Visa went public with a record-setting $18 billion initial public offering. While Visa’s profits are not entirely linked to its fees, it’s a sum that infuriates retailers.

In 2005, a coalition including NACS filed a class-action antitrust suit against the major credit card associations and banks, arguing that they are engaging in collusive practices by setting credit card interchange fees at “supracompetitive” levels.