SACRAMENTO /California Newswire/ — Assemblymember Pedro Nava (D-Santa Barbra), Chair of the Assembly Banking & Finance Committee, today announced that the Committee will hold a hearing in January to study the impact of undisclosed interchange fees charged to California consumers and merchants on every credit card transactionÂa cost estimated at nearly $5 billion a year. In addition to a fact finding hearing, the Committee will explore options open to the California Legislature to deal with undisclosed credit card charges to consumers.
Chairman Nava said, â€œWith the price of gas at more than $3 a gallon, credit card companies and their banks who sponsor gasoline credit cards are collecting as much as 8 cents per gallon for interchange fees. We need to examine our options to lower these fees and pass the savings on to California’s struggling consumers.â€
7-Eleven stores across the country just finished collecting more than 1.6 million signatures urging Congress to address interchange fees. In response, Congressmen Peter Welch (D-VT) and Bill Shuster (R-PA) introduced HR 2382, the Credit Card Interchange Fees Act of 2009. Additionally, Senators Richard Durbin (D-IL) and Christopher Bond (R-MO) introduced amendments to HR 627 (The Credit Cardholdersâ€™ Bill of Rights Act of 2009, Maloney) that allow for consumer discounts for debit cards and less expensive credit cards, and for greater transparency concerning hidden interchange fees. In response to Federal legislation, Chairman Nava will introduce an assembly resolution before the end of the year supporting the passage of legislation to create a fair and transparent environment for the negotiation of competitive rates and terms.
â€œAccording to UnfairCreditCardFees.com, hidden credit card interchange fees inflate the cost of nearly everything consumers buy, even when you pay cash. Two dollars of every $100 the consumer spends using credit cards goes directly to the credit card industry. Americans paid over $48 billion in interchange fees in 2008, more than twice what was paid in credit card late fees and three times ATM fees,” said Nava.
A recent Wall Street Journal article estimated that U.S. banks â€œraked in $45.3 billion last year from credit and debit card fees.â€ Overall merchant fees, including other revenue collected by banks and processing middlemen, are up 78% from $25.5 billion in 2003, according to the Nilson Report, a Carpinteria newsletter that tracks the payments industry.
“Most consumers donâ€™t know that every time they swipe a credit card, they help drive up the cost of consumer goods,â€ said Bill Dombrowski, President of the California Retailers Association. â€œThis particularly impacts consumers who donâ€™t have or use credit cards because Visa and Mastercard rules effectively require that everyone pay the credit card price even if they are paying with cash, check, debit card or even food stamps. Chairman Nava’s resolution, and the federal legislation it supports, brings this unfair practice to light and will hopefully provide retailers and consumers some relief and protection.”
At Januaryâ€™s Committee hearing Chairman Nava hopes to hear testimony from banks, credit card companies, consumers, small business representatives and retailers.