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WASHINGTON, D.C. -- The Senate's failure to adopt an amendment that would have delayed implementation of swipe fee reform for debit card transactions is a victory for the little guys. The battle, which pitted retailers against big banks, with community banks and credit unions sometimes caught in the middle, now seems to be coming to an end as the July 21 implementation date for the new rule draws closer.
The Senate's rejection of the amendment offered by Senators Jon Tester (D-MT) and Bob Corker (R-TN) demonstrates the power of consumer and retail industry advocacy efforts and is a major victory for the convenience and fuel retailing industry, said NACS Chairman Jeff Miller.
"This vote is an enormous win for consumers, since it fundamentally changes the rules in how banks collect $1 billion every month in debit swipe fees from consumers," said Miller, who is president of Norfolk, Va.-based Miller Oil Co. "The vote means that consumers will now have a choice in how they pay for goods, and retailers will be able to provide incentives to reward customers for selecting lower-cost options, instead of funneling these costs directly to the banks. Today's vote clearly shows the importance of making your voice heard." Defeat of the amendment clears the path for the Federal Reserve's final rules, which could be made public any day, on debit card reform to become law on July 21, Miller added. The reforms limit price-fixing by the nation's largest banks; they will now be required either to compete on their debit card swipe fees or charge an amount that is "reasonable and proportional" to their costs, he explained.
"I am so proud to represent an industry that rose up to defend themselves," Lyle Beckwith, senior vice president, government relations for NACS, told CSNews Online. "Over 35,000 letters to Congress went through the NACS website alone. This industry won a tremendous victory today, and they earned it."
NACS -- the Association for Convenience & Petroleum Retailing -- has been at the forefront of the fight to cap swipe fees. It has been joined in the efforts by other retailer organizations, such as the National Retail Federation, Food Marketing Institute and the Merchants Payments Coalition. All, most likely, collectively breathed a sigh of relief when the Tester-Corker amendment failed to receive the necessary 60 votes for adoption on the Senate floor Wednesday afternoon. Only 54 Senators voted in favor of adoption, as CSNews Online reported.
"This is a landmark victory for American consumers that will give them the break from skyrocketing swipe fees that they have been seeking for years," said Matthew Shay, president and CEO of the National Retail Federation. "With the economy still trying to gain momentum and consumers facing skyrocketing costs for necessities like food and fuel, this badly needed reform will help ensure our nation's economic recovery. It will prevent more than $1 billion a month from being pocketed by big banks and, in turn, allow retailers to hold down prices for consumers."
The Food Marketing Institute also cheered the vote. "FMI applauds the 45 senators who voted to support their neighborhood grocery stores and their customers today. There is no doubt in my mind that customers will see savings returned to their pockets once this rule is finalized," stated Leslie G. Sarasin, president and CEO of FMI.
Further applause could be heard from the Merchants Payments Coalition. "Merchants and consumers across the country owe a huge thank you to all of the senators who reaffirmed the swipe fee reform law in the face of unprecedented pressure from Wall Street banks. For nearly a decade, the country's biggest banks and credit card companies have worked tirelessly against these long-awaited reforms, and Main Street has finally prevailed. Today's vote sent a message to the big banks and their allies that the Senate is prepared to support Main Street by protecting these critical reforms," the coalition said in a statement.
"The Federal Reserve can now proceed with its rulemaking to curb swipe fee abuse, and we look forward to seeing the final rule so that Main Street retailers and consumers can start seeing some relief from out-of-control debit fees on July 21,” added the coalition.
And now the industry's attention will turn to July 21. Originally, a final vote on the Fed's proposed 12-cent cap on debit card transactions was slated for April 21, with implementation set for July 21. However, as the April vote neared, Fed Chairman Ben Bernanke said the independent government organization would not meet that deadline because there were thousands of comments to review. He did say, though, he fully expected the Fed to set a rule by July 21. Whether or not that is still possible remains unanswered at this time.
Another unanswered question is whether or not the House of Representatives is going to take up any fight to delay implementation. On June 1, NACS' Beckwith expressed some doubt that the chamber would tackle the issue. He explained that Speaker of the House John Boehner (R-OH) indicated the House would not vote on the issue unless the Senate takes action; the definition of "action" was unclear. "There has been some different interpretations of action," Beckwith said at the time. "We believe that if the Senate doesn't pass this, then it ends."
In addition, during a NACS Industry Advocacy Briefing on Capitol Hill in March, several representatives said they thought the issue was done and did not want to take another vote. "I am surprised swipe reform fees became a major issue again," Rep. John Shimkus (R-IL) said at the time. "I think most members, for us, thought the fight was over. I will be surprised if this moves anywhere." Shimkus’ remarks came on the day that Sen. Jon Tester first introduced his bill to delay swipe fee reform.