By Juan Lagorio - Analysis  NEW YORK (Reuters) - U.S. lawmakers rushed to limit credit card fees and interest rates on behalf of consumers a few months ago, but merchants may not be that lucky.  Earlier this year, when Congress passed a law limiting increases in credit card fees and interest rates to consumers, merchants initiated a campaign to curb the fees that retailers such as supermarkets and convenience stores pay to banks every time a customer uses a credit card, called interchange fees.





Two initiatives are being discussed in Congress to limit interchange fees, which are set by credit card networks Visa Inc (V.N) and MasterCard Inc (MA.N), but are collected from retailers by credit card issuers such as Citigroup Inc (C.N) or Bank of America Corp (BAC.N).



But the proposals could founder as legislators' attention is divided among healthcare, regulatory reform and other priorities. Doubts about the proposed legislation's benefit to consumers could also torpedo the plan.



Merchants contend the fees, which range from about 1.6 percent to 2.5 percent, unfairly cut into their margins and drive up prices for consumers. Financial services companies argue that the payments system is based on a pricing system that benefits businesses and their customers. Banks also said that in Australia, where interchange fees were limited a few years ago, consumers did not benefit and credit card fees rose.



Both groups have been lobbying intensively in recent months, but most observers believe the credit card companies have the upper hand.  Representative Jeb Hensarling, a Republican from Texas whose views are considered typical of Republicans' thinking on the issue, dismissed the interchange fee issue as "the cost of doing business."



The discussion in Congress points to the conclusion that "interchange is really a business-to-business issue (between merchants and banks) rather than a consumer issue (making broad political support difficult)," UBS analysts wrote.  



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