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    Debit Swipe Fee Reform May Be in Jeopardy

    Texas lawmaker moves to replace Dodd-Frank Act.

    WASHINGTON, D.C. — Nearly five years after the implementation of debit swipe fee reform, the hard-fought legislation is facing another battle on Capitol Hill.

    U.S. Rep. Jeb Hensarling (R-Texas), chairman of the House Financial Services Committee, has proposed replacing the 2010 Dodd-Frank Act, which brought about financial reform — including debit card swipe fees — in the wake of the economic downturn.

    However, the industry is taking a stand against the move, which would effectively repeal the Durbin Amendment that spelled out the debit card swipe fee overhaul.

    In a statement on Tuesday, NACS, The Association for Convenience & Fuel Retailing, joined a chorus of other retail groups voicing opposition. The association stated the reform has saved consumers nearly $6 billion and supported more than 37,000 jobs a year.

    "Debit swipe fee reform introduced some measure of competition into the debit card market, which nevertheless continues to be largely controlled by the Visa-MasterCard duopoly. Even with reform, American merchants and consumers must still pony up the highest debit and credit swipe fees in the world — up to seven or eight times what Europeans are assessed," NACS said. 

    "Without the vital protections in debit reform, higher debit card fees would not only add to prices for consumers, but also represent a tremendous additional burden to smaller merchants — especially convenience store owners, whose customers often engage in multiple transactions at the gas pump and within the store. Card fees are the second-largest operating cost for many retailers, preventing them from expanding or hiring," the association said.

    NACS is urging its members to take speak out against Hensarling's proposal.

    As The National Retail Federation (NRF) explained, under the Dodd-Frank Consumer Protection and Wall Street Reform Act of 2010, the Federal Reserve was required to adopt regulations that would result in debit swipe fees that were "reasonable and proportional" to the actual cost of processing a transaction. 

    In June 2011, the Federal Reserve approved rules that included a 21-cent base fee which went into effect Oct. 1 of that year, as CSNews Online previously reported.

    NRF said Hensarling's announcement to repeal debit card swipe fee reform would "return to the bad old days when card companies and banks freely picked the public's pocket," said Mallory Duncan, NRF senior vice president and general counsel.

    "Protecting bank profit margins at the expense of competition is not sound public policy and it will harm merchants and consumers. The financial services industry attempted to get Congress to reject transparency and competition in 2010 and again in 2011. Both efforts failed. On behalf of retailers and their customers, NRF will fight for free and open markets," Duncan added.

    The Merchants Payments Coalition also came out against repealing any reform.

    "The Hensarling proposal would promote more price-fixing and detract from the few market forces that were actually created on debit card fees," said Douglas Kantor, counsel to the Merchants Payments Coalition. "It is unfortunate that the chairman's proposal would undermine the free market and instead support price-fixing that benefits the largest of the largest banks and threatens consumers, merchants and the entire economy." 

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