Home Depot, Congress Exchange Fire over Payment Card Costs
June 16, 2016
Home Depot has joined Walmart as retailers’ on-again, off-again legal battle with the card brands and their issuing banks flares anew. Home Depot has filed an antitrust suit in federal court in Atlanta charging, as Walmart did , that the Chip-and-Signature version of EMV Visa and MasterCard are mandating retailers comply with is less secure than the Chip-and-PIN version used nearly everywhere else in the world. Home Depot charges in the lawsuit that the card brands colluded to force retailers to use a technology that is “defective and subject to fraud” because the issuers and networks reap higher fees from signature transactions that PIN transactions.
The battle over payment-card fees paid by merchants to issuers has been festering for decades as each side tries to gain an advantage. The suits by Walmart and Home Depot, which will be joined by others, according to reports, comprise only one front currently being fought. The Durbin Amendment—part of the Dodd-Frank financial reform bill passed in 2010 that capped the interchange retailers are required to pay on debit-card transactions—is under attack as well. This week, Rep. Randy Neugebauer (R-Texas) joined fellow Texas Republican and House Financial Services Committee Chairman Jeb Hensarling by introducing H.R. 5465, which, like Hensarling’s Financial CHOICE Act, would repeal Durbin and its debit caps.
“What the Durbin Amendment did do was artificially shift over $30 billion in revenue from one industry to another,” said Rep. Neugebauer. “Instead of promoting free market principles and technological innovation, such as enhanced data security capabilities, the Durbin Amendment was nothing more than a government action to manipulate the marketplace.”
Mallory Duncan, senior vice president and general counsel of The National Retail Federation, a merchant trade association, had a different take: “Increasing these fees will undermine Main Street businesses, keep them from hiring and expanding, and slow the entire economy. Rep. Neugebauer wants to give the banks one last gift before retiring from Congress, but he is on the wrong side of this issue and the American people.”