Retailers assail credit card fees in House hearing

Joshua Floum, Visa's general counsel, told lawmakers the bill would impose "price controls" on the credit card industry.

The interchange fee helps pay for the convenience and security of credit card transactions, he said, which benefits retailers. Banks that issue cards are on the hook for any fraudulent transactions and take the credit risk that the consumer may not pay.

The fee also helps pay for airline points and other rewards.

Retailers "acknowledge the value that electronic payments bring to them, but they want it for less money," Floum said.

Joshua Pereiz, an executive at MasterCard, said the card companies do negotiate fees. MasterCard agreed to a reduced fee for gas stations in 2006 as gas prices began to rise.

"Opportunities to negotiate are being cast aside for litigation and legislation," Pereiz said.

Retailers have filed over 60 lawsuits against the card companies alleging antitrust violations. Those suits have been consolidated in a New York federal court and haven't yet gone to trial.

The Government Accountability Office issued a report Thursday that the card companies and banks said bolstered their argument.

The GAO found that federal agencies, such as Amtrak and the Post Office, have reported higher levels of customer satisfaction since accepting credit and debit cards and that government agencies have been able to negotiate lower interchange fees.

The report also found mixed results from an effort by Australian regulators to cap interchange fees in 2003. Merchants have benefited from lower fees, the report said, but there's no evidence they have passed that benefit to consumers by lowering prices.