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Utah Rep. Chris Cannon has introduced the credit card fair fee legislation that deals with one of the largest card fees of all - the little-known interchange fee.

Interchange fees are the amount credit card companies and their banks charge to merchants every time a consumer uses a credit or debit card to pay for a purchase.

Credit card companies and banks collected more than $36 billion in interchange fees last year, up 117 percent since 2001.

Merchants pass along these fees to consumers - amounting to about $300 each year for an average American family, said Cannon, a Republican who introduced the bill Thursday with House Judiciary Committee Chairman John Conyers, D-Mich.

The fees increase the price of everything consumers buy - even those who don't use plastic and pay by check or cash, said Cannon. And, consumers pay billions of dollars in these "hidden fees" that never appear on their monthly statements.

"With the price of gas at more than $3 a gallon, credit card companies and their banks are collecting as much as 8 cents per gallon in interchange fees - even as they continue trying to keep consumers in the dark about how much they are really paying," said Cannon.

Interchange fees are set by credit card companies, with Visa and MasterCard controlling nearly 85 percent of the cards issued.

The bill calls for a panel appointed by the Department of Justice Antitrust Division and Federal Trade Commission to set fees.

"The last thing we need is the government to show up and try to fix something that's not broken," said Utah Bankers Association President Howard Headlee. "When consumers lose their SkyMiles or Marriott points or they cannot use their credit cards to buy something, they'll be livid with this initiative of Congressman Cannon's."

Headlee said the fees are reasonable because banks assume risks of credit card fraud for both consumers and merchants. The plastic means that merchants don't suffer a loss "like the old days when a customer's check bounced long after the television set walked out the door."

But Jim Olsen, president of the Utah Retail Merchants Association, said Visa and MasterCard "are charging exorbitant fees and using the money for purposes other than to pay normal costs of doing business and making a reasonable profit."

For her part, Jeanne Thomas, owner of The Pie Pizzeria in Salt Lake City, South Jordan, Midvale and Ogden, said "We pay a ton of money for all the credit cards we take, but it's something we have to do for our customers."

Interchange fees

* The amount credit card companies and their banks charge merchants each time a credit or debit card is used to make a purchase.

* As much as $2 of every $100 that consumers spend goes to the merchant's bank, the consumer's bank and the card issuer.

* Fees are based on a complex pricing structure, with supermarkets charged lower rates and hotels and airlines higher rates.

* Rates for card point-of-sale purchases are lower than over the telephone or Internet, based on risk.