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.”