Rep. Bill Shuster (R-PA) and House Judiciary Committee Chairman John Conyers (D-MI) have re-introduced legislation in the House of Representatives that will help merchants and retailers. The Credit Card Fair Free Act would allow stores, restaurants, services stations and other merchants and retailers to negotiate with banks to reduce the interchange fees that they’re charged for credit card purchases. “This legislation will give merchants a seat at the table in the determination of these fees,” said John Conyers in a statement. “It is not an attempt at regulating the industry and does not mandate any particular outcome. This bill simply enhances competition by allowing merchants to negotiate with the dominant banks for the terms and rates of the fees.”

One of the major complaints from merchants is that they haven’t been able to negotiate the fee structure with banks in the Visa and MasterCard network, who control nearly three-quarters of the volume of general purpose credit transactions. (American Express Co and Discover Financial Services have their own systems.) The current system has been called anti-competitive and critics claim the fees are passed on to consumers. Interchange rates range from 1.6% to over 2% with approximately $48 billion collected last year, averaging 1.75% of total purchases.

With profits squeezed by the recently passed credit report bill, banks were relieved to see the interchange fee structure left intact. But this new bill would be another setback for banks looking for ways to restore profits and shore up their balance sheets. “Any time you cut out interchange fees, it’s really detrimental to credit unions because we have smaller economies of scale, unlike the larger issuers,” said Eddie Ambrose, Associate Director of Legislative Affairs for the National Association of Federal Credit Unions. “It’ll adversely affect us more.”

The bill is a reworking of previous attempts to pass legislation. Merchants and retailers would be given greater access to negotiations to establish rates and terms with banks. An antitrust attorney from the Department of Justice would be present at the discussions. However, the provision in last year’s bill that would require merchants to pass along the savings to consumers was not included.

The Electronic Payments Coalition, representing payment card networks and financial service companies, opposes the bill and criticizes the motivation of merchants. “This legislation is an attempt by giant retailers to make consumers pay for one of their business expenses — the cost of accepting credit and debit,” the group said in a statement.

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