House Judiciary Chairman John Conyers (D-Michigan) unveiled legislation Thursday, March 6, that would require credit card companies to negotiate with stores over fees they charge for processing each transaction — kicking off a massive lobbying battle between banks and retailers.  The Conyers bill would require credit card companies possessing “substantial market power” to negotiate with merchants to strike a voluntary agreement on terms and conditions.

If an agreement cannot be reached, both sides would be required to submit to binding arbitration by a three-judge panel appointed by the Justice Department and Federal Trade Commission (FTC). The bill represents a victory for retailers, who complain credit card company contracts require stores to build the transaction fee into the price of merchandise, forbid the fee from being shown on receipts and block cash discounts for some purchases.

Congressman Conyers sided with the retailers in the battle, noting that the consumer ultimately is harmed by fees of up to 2 percent for each credit- or debit-card transaction.     “These fees are ultimately passed on to all consumers in the form of higher prices for goods and services, whether the consumers purchase these items by credit card, check or cash,” Conyers said.  Banks and credit card companies contend retailers are free to decide if they want to participate in credit and debit programs, and those who opt to use electronic charges usually tend to bring in greater sales than cash.

The Conyers bill was written in a way that addresses antitrust laws, similar to legislation enacted several years ago to regulate music royalty payments from Webcasters.

Retailers benefit by keeping the bill within the jurisdiction of the Judiciary Committee, instead of the House Financial Services Committee, where banks have a considerable amount of influence. The bill is likely to trigger a possible jurisdictional spat, as members of the House Energy and Commerce Committee have weighed in on the issue.