After Merchant Victory in Senate, Payments and Banking Industry Respond
May 20, 2010
After last week’s vote that added Sen. Richard Durbin’s amendment addressing swipe fees on debit cards to a financial services regulatory overhaul bill under consideration in the Senate, representatives of the banking and payments industries fired back. The amendment leaves it to the Federal Reserve to define whether the fees imposed on merchants by Visa and MasterCard’s issuing banks are “reasonable” and “proportional.” The card networks each released statements expressing disappointment in a measure they said could reduce competition and hurt consumers if it makes it into the final bill and is passed as part of the Restoring American Financial Stability Act of 2010. Visa cautioned merchants that “Thursday’s vote is another step in a lengthy legislative process. We’re hopeful that when the issue is fully reviewed by members of Congress during the next phase of negotiations, they will conclude the amendment harms consumers, credit unions and community banks and should be eliminated from the bill.” The San Francisco-based card network also noted the results of a recent study by the Government Accountability Office that could not draw a clear conclusion that consumers are hurt by the current interchange structure. MasterCard said the amendment will “increase profits for big box merchants at considerable expense to consumers, community banks, and credit unions” if passed as part of a banking regulatory overhaul. While retailer groups have been unanimous in their praise of the Senate for including the amendment in the financial reform package, the overall measure must first pass and then be reconciled with the House’s version of reform, which doesn’t address swipe fees at all.