Credit Cards Plus

A Democratic congressman has introduced legislation regarding debit cards tied to checking accounts, which could affect consumers.

Vermont’s Peter Welch presented the Electronic Check Parity Act, which would require card issuers to treat debit card transactions in the same manner as paper checks. His bill would give the Federal Reserve System the responsibility to make sure the rules are enforced.

At issue are interchange fees, which banks charge merchants for every debit card transaction. Through agreements with issuers, retailers are not allowed to set minimum transaction amounts for cards, which leads them to lose money on smaller purchases.

Groups such as the National Association of Convenience Stores have noted that these fees end up being passed on to consumers in the form of higher prices.

“Small businesses and consumers are getting hit over and over by the big banks, which end up making billions from these hidden fees,” Welch said.

The bill is similar to legislation introduced by Illinois Democratic Senator Dick Durbin. Like Durbin’s measure, Welch’s would allow merchants to set minimum charges for card transactions.

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