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Swipe Fee Regulation under Congressional Assault

March 17, 2011

The Durbin Amendment to the Dodd-Frank financial reform legislation came under intensified attack this week as legislation was introduced in both chambers of Congress that would put the brakes on swipe fee regulation for debit cards. Bills in the House and the Senate propose to delay implementation of the Durbin Amendment to further study is possible effects. A bill introduced in the House by Rep. Shelley Capito (R-W.Va.) would delay the rulemaking process already underway at the Federal Reserve and force higher fees if costs to banks of allowing debit transactions aren’t covered. A Senate bill from Sen. Jon Tester (D-Mont.) would push back the deadline for the Fed rules by two years with a provision for a study of “unintended consequences” to be completed within a year. Under the current Dodd-Frank Act, the final rule is expected in April. The Fed has already made a proposal that would cap debit interchange at $.12 per transaction. “The stakes are simply too high to move forward with this rule without a closer look at the impact on consumers, credit unions, community banks, and the small businesses and jobs they sustain” said Tester, a member of the Senate Banking Committee. “That is why we need to make sure we stop and study these proposed rules before implementing anything.” Merchants shot back, incredulous that lawmakers would side with large banks on the issue. “We are extremely surprised to see a bill introduced that favors Wall Street banks and price-fixing card companies over Main Street merchants and their customers,” said Mallory Duncan, senior vice president and general counsel of the National Retail Federation, a national trade group representing retailers. “Merchants are ready to pass lower swipe fees along to consumers in the form of discounts and other benefits as soon as reform goes into effect in July but we can’t do that if Congress lets bankers stand in the way.”



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