Fed to face Congress on debit fee crackdown

By Reuters
Posted Feb. 9 at 5:43 p.m.

The Federal Reserve may give U.S. banks insight into whether it will scale back its proposed crackdown on debit card processing fees, when a top official testifies before a congressional panel next week.

Fed Governor Sarah Raskin is expected to appear before a House of Representatives panel on February 17, according to a copy of the tentative witness list obtained by Reuters.

Banks and card companies such as Visa and MasterCard have been pleading with Congress and the Fed to ease up on a December proposal that would cut debit processing fee revenue by about 75 percent.

Merchants pay a fee to banks and networks like Visa every time a customer buys something with a credit or debit card.

The Dodd-Frank financial reform law, passed in 2010, directed the Fed to restrict on such fees, arguing the financial industry was gouging merchants.

But banks and card companies — and even some Democratic lawmakers such as Barney Frank — have argued the Fed’s proposal in December cuts too deep and would prevent financial companies from covering their own costs.

The debit card industry could lose some $13 billion of an estimated $23 billion in annual processing fee revenue as a result of the rules, according to CardHub.com.

Federal Reserve spokeswoman Susan Stawick declined to comment on Wednesday.

Bankers and retailers are also scheduled to testify before the panel, according to the list obtained by Reuters. The scheduled witnesses include Visa General Counsel Joshua Floum, 7-Eleven Inc Vice President and Treasurer David Seltzer and Commerce Bancshares Inc Chief Executive David Kemper.

Comments on the Fed’s rules are due on Feb. 22, and the Fed is required by the law to put out a final rule on the fees by April 21. It would become effective in July.


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