House Subcommittee Continues to Examine Interchange
Aug. 9, 2010
Despite the inclusion of the Durbin amendment, which limits the amount issuing banks can charge businesses in swipe fees on debit cards, in the recently passed financial reform bill, the federal government has not ended its examination of the matter. Recently, a House subcommittee held a hearing on the impact of the fees on small businesses. Among the witnesses was Jerry Buss, owner of 55 Western Pa. Pizza Huts, who detailed what interchange costs have done to his business. He noted that the rate his business pays in swipe fees has climbed each year from 2.25 percent in 2008 to 2.34 percent last year to 2.44 percent this year totaling tens of thousands of dollars each year in additional interchange. While banks claim a reduction in swipe fees wouldn’t be realized in lower prices to consumers, Buss told the panel that most businesses would reinvest the additional revenue. “If I could just save the projected fee increase for this year, I would have 20 percent of equity of a new restaurant, or I could buy a new fryer for menu additions, or remodel an older building,” Buss testified. “It could mean that we are able to provide wage reviews or merit adjustments to my employees. We could provide additional and more convenient locations for my customers. In any event, that money would certainly pass through the economy with multiple effects. My fellow merchants and I could again take gambles with the kinds of investment that lead to growth and jobs—as opposed to the stagnation that we currently see.” Click here to read Buss’ entire statement.