Washington, D.C. The National Retail Federation announced that it welcomed Senate approval of an amendment to financial services reform legislation that would direct the Federal Reserve to determine “reasonable and proportional” transaction fees for debit cards.
“Main Street America bailed out the biggest banks in this country not so long ago,” said Mallory Duncan, VP and general counsel for NRF. “Passage of the Durbin amendment ensures that those same banks won’t repay our generosity by undermining the fairness and integrity of the checking and debit-card system.”
The Senate voted 64-33 Thursday to approve an amendment to S. 3217, the Restoring American Financial Stability Act of 2010, offered by Majority Whip Richard Durbin, D-Ill. NRF counted consideration of the amendment as a key vote to be included in NRF’s annual ranking of lawmakers on issues important to the retail industry.
The amendment would require the Federal Reserve to establish “reasonable and proportional” interchange fees for debit transactions. The fees would have to take into consideration both the actual cost of processing the transactions and the fact that paper checks are paid at face value.
The fee for debit cards currently averages about 1% and is charged to merchants each time a card is swiped to pay for a purchase. NRF estimates that the fees cost merchants at least $10 billion a year, and card-industry practices effectively require that they be built into the price of merchandise, driving up costs for consumers.
The amendment would exempt an estimated 99% of credit unions and banks by applying only to financial institutions with $10 billion or more in assets. But most consumers would still be protected because the majority of cards are issued by a handful of the nation’s largest banks, according to NRF.