In a press release this afternoon, MasterCard said that "legislation introduced by Sen. Dick Durbin (D-IL) would harm consumers by taking away the fundamental consumer protections antitrust laws provide. By giving merchants an exemption from antitrust laws and establishing a government price control board, the bill would result in consumers paying more to use their credit cards. Experience has demonstrated that when merchants no longer pay their fair share for the benefits they receive from card acceptance, consumers pay the price through less credit availability, higher prices to use their cards, and fewer benefits." READ MORE »

Earlier today, we posted about a new Working Paper from the Federal Reserve titled "Interchange Fees and Payment Card Networks: Economics, Industry Developments, and Policy Issues". We've quickly scanned through it - it's an impressive analysis of the issues, economics, etc. surrounding interchange fees.

The last section of the document takes a look at potential policy interventions that could be considered. These include:

• Clarifying or eliminating restrictions on differential retail pricing across payment methods
• Prohibiting network determination of interchange fees
• Regulating the level of interchange fees
• Mandating "multi-bugged" cards that can perform transactions on multiple networks with merchant control of network routing rules
• Doing nothing

If you're at all interested in the subject of interchange fees for payment cards, this working paper is a must read!

Yesterday, Senator Richard Durbin introduced S.1212 in the US Senate - "A bill to amend the antitrust laws to ensure competitive market-based fees and terms for merchants' access to electronic payment systems."

The Electronic Payments Coalition in a press release today responded by saying, among other things, that it "strongly opposes interchange legislation introduced yesterday in the U.S. House of Representatives by Senator Dick Durbin (D-IL) - a bill nearly identical to one that received broad bipartisan opposition last year. 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. It's simple: merchants do not want to pay their fair share to accept debit and credit cards, and they want consumers to foot the bill. If this legislation passes, American families will end up footing retailers' bills when it comes to accepting debit and credit cards."

The US House of Representatives passed a bill on Monday that sets aside $4 billion to subsidize new car purchases by consumers who scrap their old clunkers. The legislation is now moving to the Senate and, according to CNN, is supported by President Obama.

Maybe what this country needs is a Clunker Card to go with this "clunker bill". When you make your purchase, the dealer uses the Clunker Card to authorize the subsidy, allowing the Federal government to track usage, etc.? Think of the psychological power that card will exert on consumers who receive it - they'll just have to spend it!

Reminds me of the American Gift Card that Dan Newman first proposed in an op-ed in the Washington Post earlier this year!

Accertify has announced that its Interceptas platform has been chosen by eHarmony, the online service that uses relationship science to match singles seeking long-term relationships. READ MORE »

In an article in today's Politico titled "John Conyers takes aim at interchange fees", Victoria McGrane writes about the interchange fee legislation re-introduced last week in Congress by John Conyers and Bill Shuster. The bill would She notes that lobbyies for the financial industry opposing the bill "point out that Conyers’ bill — unlike an earlier version — does not specify that merchants must pass on savings to consumers."

The Federal Reserve has published a new working paper in its Finance and Economics Discussion Series titled "Interchange Fees and Payment Card Networks: Economics, Industry Developments, and Policy Issues" by Robin A. Prager, Mark D. Manuszak, Elizabeth K. Kiser, and Ron Borzekowski.

From the abstract:

In many countries around the world, electronic card-based payments have been replacing older types of payments at a rapid rate. In the United States, use of both debit cards and credit cards has been rising rapidly, while check volumes have been declining. The increased use of electronic payment methods has generated a number of public policy debates. One prominent debate concerns interchange fees. This paper is intended to provide background for understanding the interchange fee debate. The paper describes the operation of a typical payment card system, presents a summary of the economic theory underlying interchange fees, and discusses various developments in the U.S. payment cards industry, as well as legal and regulatory developments abroad. The paper concludes with a discussion and critical evaluation of a number of potential policy interventions.

Visa has announced that it is introducing VisaVue Travel, a new service that will provide government agencies, hotels, airlines and other organizations within the U.S. tourism industry with insights into spending by international visitors to the U.S. Visa says that "the new service will enable subscribers to tailor their marketing and promotional strategies and budgets based on up-to-date information about international spending on Visa payment card transactions." READ MORE »

In an article titled "Frequent Fliers, Choose Your Card", Justin Bachman writes for BusinessWeek about the battle between US Bank and American Express over the former US Bank/Northwest Airlines WorldPerks cardholders - now that Northwest is about to merge with Delta, longtime partner with American Express. Bachman writes: "The fight over this customer base has been ferocious."

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