BILL REQ. #:  S-2145.1 

Read first time 02/25/09.   Referred to Committee on Financial Institutions, Housing & Insurance.

     TO THE PRESIDENT OF THE SENATE AND THE SPEAKER OF THE HOUSE OF REPRESENTATIVES, AND TO THE SENATE AND HOUSE OF REPRESENTATIVES OF THE UNITED STATES, IN CONGRESS ASSEMBLED:
     WHEREAS, Consumers are increasingly using credit and debit cards and other electronic transactions to make purchases and the number of credit and debit card transactions each year now exceeds the number of check transactions; and
     WHEREAS, The lack of transparency relating to the fees, policies, and practices of credit card organizations has serious social and economic consequences for merchants and consumers; and
     WHEREAS, American consumers pay billions of dollars annually in undisclosed fees; and
     WHEREAS, Consumers are not informed about the most expensive credit card fee of all, the "interchange fee"; and
     WHEREAS, Undisclosed interchange fees have risen dramatically in recent years, totaling $30.7 billion in 2005, up 17 percent over 2004 and 85 percent since 2001; and
     WHEREAS, Merchants are required to pay these hidden interchange fees to banks and credit card organizations and are not allowed to offer discounts for cash or disclose to consumers how much they are paying in interchange fees; and
     WHEREAS, Interchange fees are ultimately passed on to consumers, including those who pay by cash or check, in the form of higher prices; and
     WHEREAS, Only 13 percent of the interchange fee goes to pay for the actual cost of an electronic transaction, and 44 percent goes for rewards programs and other incentives that benefit mostly wealthier people; and
     WHEREAS, Banks and credit card organizations use interchange fees to pay for aggressive marketing programs, including nearly 8 billion direct mail credit card solicitations in 2005, a 30 percent increase over the prior year; and
     WHEREAS, Marketing programs paid for by interchange fees have helped put a record number of credit cards, almost one billion, in the hands of consumers, including young people, college students, older consumers, and others prone to fall into debt; and
     WHEREAS, American consumers and retailers pay the highest credit card interchange fees in the world with rates averaging close to two percent; and
     WHEREAS, The average American family pays more than 300 dollars each year in hidden interchange fees; and
     WHEREAS, Competitive economic models do not work when there are very few businesses that process transactions and merchants are forced to accept terms dictated, often without notice or recourse, by the credit card organizations; and
     WHEREAS, With more and more consumers using electronic payment methods, the United States Congress needs to assure that the economic playing field is fair to consumers, merchants, and card providers alike; and
     WHEREAS, More than 90 percent of American adults surveyed agree that Congress should require credit card organizations to be more open about their policies and practices regarding interchange fees;
     NOW THEREFORE, Your Memorialists urges the United States House of Representatives and the United States Senate to hold hearings on interchange fees and take action limiting credit card interchange fees and the clear and concise disclosure to consumers and retailers thereof;
     BE IT FURTHER RESOLVED, That copies of this Memorial be immediately transmitted to the President of the United States Senate, the Speaker of the House of Representatives, and each member of Congress from the State of Washington.