Bernanke, Durbin at Odds over Interchange

Feb. 22, 2011

The fight to regulate swipe fees heated up again last week when hearings were held in both the House and Senate to explore the consequences of the Federal Reserve’s proposed rules on the matter. The Fed’s proposal, which was mandated by the Durbin Amendment of the Dodd-Frank financial reform law passed last year, would cap the fees issuing banks could charge merchants for debit card transactions at 12 cents per transaction. During the Senate hearing, Fed Chairman Ben Bernanke suggested that the exemption for smaller banks might not be effective in practice saying “it’s possible merchants will reject cards from smaller banks.” In response, Sen. Durbin, for whom the amendment was named, said Bernanke was “basically wrong” in his assessment of the situation. Durbin said that retail merchants would not discriminate between the cards from banks above and below the $10 billion threshold for which the Fed Rules will apply. “The credit card company rules are very strong on this,” Durbin said. “They cannot discriminate against credit cards, plus it would cost them business to do so.”