Will the government intervention be of any success?

[img_assist|nid=7509|title=|desc=|link=none|align=left|width=66|height=100]While a House Judiciary Committee antitrust task force is considering the proposals to introduce the Credit Card Fair Fee Act and give merchants more power to negotiate interchange fees the Government Accountability Office (GAO) released a report which shows that a reduction in interchange fees would not necessarily benefit customers. Banks and credit card networks found the report to be forcible argument against legislation measures.

According to the report federal agencies studied customer satisfaction and improved operational efficiency since accepting credit and debit cards and found these to be quite high. Some agencies have also attempted to negotiate lower interchange fees, with "mixed success".

Besides, the GAO questions the statements of the government that its actions to cut interchange fees in other countries have benefited consumers.

In 2003 in Australia attempts made to reduce interchange fees acted in merchant's favor but "no conclusive evidence exists that lower interchange fees led merchants to reduce retail prices for goods". MasterCard and the Electronic Payments Coalition consider the report to sustain the argument against any intervention in the market.

"By providing examples of other countries where such price controls have been attempted, the report reveals flaws in such an approach and illustrates the adverse effects on consumers that resulted in such attempts," stated the EPC.

Both the coalition and MasterCard hope the report will have a proper influence on the Congress to convince it that any intervention "would be harmful to all participants in the credit and debit market".

As per Joshua Peirez, chief payment system integrity officer at MasterCard Worldwide, merchants don't need price control legislation or an antitrust exemption to lower costs for payment card acceptance as they already have "real opportunities to negotiate fees".

"Even though this is a basic commercial dispute, merchant lobbyists appear to be casting aside existing opportunities to negotiate in favor of congressional intervention in the form of price control legislation," said Peirez.

"Legislation would bring about true competition among the banks that issue credit cards, giving retailers the opportunity to negotiate terms on behalf of themselves and their customers that reflect the actual cost of the services provided," says Mallory Duncan, senior vice president and general counsel at The National Retail Federation (NRF).