WASHINGTON -- The National Retail Federation said legislation introduced today to delay swipe fee reform scheduled to go into effect this summer would block retailers from giving discounts to consumers who use debit cards and would cost merchants and the public more than $1 billion per month.
“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,” NRF SVP and general counsel Mallory Duncan said. “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.”
Senator John Tester, D-Va., today introduced the Debit Interchange Fee Study Act of 2011, which would postpone swipe fee reductions included in last year’s Dodd-Frank Wall Street Reform and Consumer Protection Act by two years and require a study of the issue. Meanwhile, some members of the House Financial Services Committee are reportedly planning to introduce a bill calling for a one-year delay and a study.
Regulations proposed by the Federal Reserve in December to implement Dodd-Frank would lower debit card swipe fees from their current level of 1% to 2% of each transaction to a flat fee of no more than 12 cents per transaction for large banks that adhere to fees set by the card companies. Banks that set their own rates would be free to charge any fee they believe the market would bear. The move would reduce the current $20 billion a year in debit swipe fees by about 70%, or $1.2 billion a month. The Fed is scheduled to issue a final version of the regulations in April and the reforms are set to take effect in July.
NRF filed comments with the Fed in February arguing that the 12-cent cap doesn’t go far enough. NRF told officials debit cards are merely plastic checks and should be honored at or close to face value since paper checks that draw on the same accounts are not subject to swipe fees. Banks’ own filings with the Fed claim only 4 cents as the cost of processing a debit transaction.
“The banks and card companies claim they want to study swipe fee reform but the truth is they want to kill it,” Duncan said. “Congress has already conducted more than half a dozen hearings on this issue, and the GAO and Federal Reserve have done studies of their own. The time for study is over. The time to reduce these fees and take bankers’ hands out of consumers’ pockets has come.”