Congress and the Courts Tackle Credit Card Fees at Service Stations

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David Rodi, Jul 28, 2008

With the recent increase in motor fuel prices in the United States, the credit card processing fees paid by service station owners have come under increased scrutiny from both the U.S. Congress and the courts. Most credit card fees are calculated as a percentage of the transaction value. Because US$4-per-gallon gasoline leads to a higher total transaction amount for each fill-up, retailers complain that the resulting increase in credit card fees is eating into or completely consuming their retail margin on each gallon of fuel. National and local media have highlighted this issue, usually presenting the plight of the service station owners as yet another ill-effect of high fuel prices. Congress has taken notice, too. In March, Representative John Conyers (D-MI) introduced the Credit Card Fair Fee Act of 2008, which would grant merchants an exemption from the antitrust laws in order to allow them to band together and jointly negotiate with credit card companies over fees. The bill, which was passed out of the House Judiciary Committee in July, also would create a new administrative panel of “Electronic Payment System Judges” to determine the rates for credit card processing in the event that merchants cannot reach voluntary agreement with the card companies. Meanwhile, the federal courts have been wrestling with antitrust challenges to the credit card processing requirements that the major oil companies impose on their dealers and wholesalers. In two recent cases, both the U.S. Court of Appeals for the Seventh Circuit and the U.S. Court of Appeals for the Ninth Circuit have rejected allegations that the oil companies credit card requirements constitute illegal tying under the Sherman Act. Whether these recent decisions will give greater impetus to the Credit Card Fair Fee bill remains to be seen.


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