Eight States Oppose Limits on Credit Card Merchant Fees
Banks may have recruited state governments to help lobby against proposed caps on credit card merchant fees. According to a report in the Washington Post, at least eight state treasurers may sign a letter to Congress opposing limits on the amounts that merchants must pay for access to payment platforms operated by companies like Visa and MasterCard.

Although Capitol Hill lawmakers have expressed bipartisan support for a measure that would seem to benefit consumers, the state treasurers identified by the Post assert that critical assistance programs could be hurt by interchange fee limits. Debit and credit card issuers currently waive setup and maintenance fees on many government-issued payment cards. With limited ability to recoup costs from merchant payments, some issuers may require local governments to foot the bill, the treasurers said.

Government programs in at least 46 states use prepaid debit and credit cards to issue welfare payments, tax credits, employee wages, and other disbursements. Private analysts cited by the Post estimate that government agencies loaded more than $69 billion onto prepaid cards during 2008. The proposed drop in interchange fees could cost the banking industry more than two-thirds of a billion dollars in revenue from government stored value cards alone.

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Joe Taylor Jr. is an internal business consultant for a Fortune 500 company, who writes about finance, culture, and design. He holds a Bachelor of Science in Communications from Ithaca College.