Bills introduced to delay debit-card swipe-fee limits

By Dow Jones Newswires
Posted March 15 at 5:34 p.m.

Sen. Jon Tester (D-Mont.) and a bipartisan group of U.S. senators on Tuesday formally launched their legislative attack on the Federal Reserve’s plan to regulate debit-card transaction fees, a move cheered by banks and credit unions but slammed by retailers.

The bill, dubbed the Debit Interchange Fee Study Act, comes amid mounting concerns over the Fed’s proposed fee caps and calls for a two-year time out on the regulation.
The American Bankers Association, the Independent Community Bankers of America, the Consumer Bankers Association and the National Association of Federal Credit Unions applauded Tester’s move.

Rep. Shelley Moore Capito (R-W.V.), who leads a House Financial Services subcommittee, plans to introduce a similar bill to delay the Fed’s regulation of the debit card processing fees banks charge retailers. Her bill would require a one-year delay and greater study of the issue.

A spokeswoman for Capito said the legislation would ensure the fee cap is fair. Some consumer advocacy groups say a deep cut in the fees could force financial firms to raise the cost of checking accounts and other services, which could push low-income consumers out of the banking system. No one wins when consumers don’t have access to banks, Capito’s spokeswoman added.

“We are very encouraged by the actions taken by Congress today,” Consumer Bankers Association President Richard Hunt said. “Only through a delay and study will we fully understand the impact this will have on American consumers.”

The Fed’s plan, mandated by the Dodd-Frank financial-overhaul law Congress passed last summer, would cap interchange fees at 12 cents per debit-card transaction, down from the average of 44 cents. That has raised concerns about the proposal’s effect on small banks and low-income consumers.

Retailers have fought hard for limits on the interchange fees they pay to banks every time a consumer swipes a debit card at a cash register, and they won a key victory last summer when Assistant Senate Majority Leader Dick Durbin (D-Ill.)¬† included the interchange-regulation requirement in the Dodd-Frank bill. Durbin has since vowed to “strongly oppose” legislative efforts to delay the Fed’s “swipe fee” rules.

“Every month we delay limiting the amount banks and credit-card companies charge merchants means another $1.3 billion bailout for Visa (Inc.), MasterCard (Inc.) and their big bank allies,” Durbin said in a statement Tuesday. “The $13 trillion banking industry doesn’t need another handout — especially one paid for by small business and American consumers.”

Consumer advocates are at odds. While groups such as the National Community Reinvestment Coalition are urging the Fed to withdraw its proposal, others such as Public Citizen and U.S. PIRG say the rule would benefit consumers and are fighting efforts to delay the rule.

Tough it would be hard for Tester to get the 60 votes  to delay implementation of the interchange-fee law, bipartisan concerns about it are growing.

The Fed is required to issue a final debit fee rule by April 21. On a conference call with reporters, Tester said he wants the bill passed before that.

Senators Bob Corker (R-Tenn.), Jon Kyl (R-Ariz.), Ben Nelson (D-Neb.), Tom Carper (D-Del.), Pat Roberts (R-Kan.), Chris Coons (D-Del.), Mike Lee (R-Utah) and Pat Toomey (R-Penn.) are co-sponsors.

Still, retailers are criticizing the Tester bill.

“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,” said National Retail Federation General Counsel Mallory Duncan. “The banks and card companies claim they want to study swipe fee reform but the truth is they want to kill it.”

Similarly, a spokeswoman for the Retail Industry Leaders Association argued that the Tester bill would give banks a bailout at the expense of retailers and consumers.



  1. Tom March 15 at 8:09 pm

    For all the talk about Unions and the Democrats, this is a classic example of big money (banks) and the GOP fighting so they can keep taking advantage of the regular guy with outrageous bank fees!!! Think about it, a $2 fee to electronically withdraw YOUR money. Take out $40, and that is a 5% fee. Sounds like a crime!

  2. OakLawnBill March 15 at 8:26 pm

    The GOP is concentrating on everything but what they ran on -jobs. The banks already got away with robbing us blind with toxic mortgages, increased credit card rates to the level that would make the mafia blush, and congress keeps selling the middle class out.

  3. Lisa G March 15 at 8:53 pm

    What the banks want, the banks get.

  4. kate March 15 at 9:25 pm

    I am glad I bank through a credit union. Credit Unions typically don’t have these crazy fees. We need to find alternatives to big corporate banks. Local banks and credit unions for a start. This fee stuff is ridiculous. The money banks have saved on having human tellers in exchange for plastic cards isn’t enough for them? It’s fees, fees, fees… bye bye big banks. Who needs ‘em.

  5. Mitch P March 15 at 9:32 pm

    I guess the banks are now running this country through their GOP puppets. Too big to fail? Too big to control! Break them up now before the next crisis comes.

  6. cece March 15 at 9:43 pm

    credit unions with debit cards suffer from the Durbin amendment. Sen. Tester is right on track to help credit unions serve their members. Will businesses pass on savings? highly unlikely. remember, Walmart is
    a business too. and they also want to be a financial institution so they will take business away from credit unions. what is more likely is that small lending institutions like credit unions will suffer, go out of business, prevent consumers from access to small loans and credit, and that will mean fewer customers for small business. Pass the Tester Debit Interchange Fee Study Act!!!!

  7. Max March 16 at 1:56 a.m.

    All banks , large and small, local or not charge debit card fees. Credit unions do to. This the cost associated with this product charged to merchants when you swipe your debit cards. For all those attacking banks, stop and look at is law for a moment. Who gains the most? There is no provision in the law forcing stores (ala walmart) to lower prices. Instead , large companies will save billions on top of their profits , while banks will be forced to cut the debit card or limit it. Australia passed a similar law years ago and retailers did not pass on the savings. This is simply a way to limit the options of the consumers under the pretense of saving small business and helping consumers. The government would be better off regulating the highly speculative nature of oil prices as that far more effects our economy with sky rocketing gas prices. Instead they wish to transfer the cost of doing business directly from the retailer to the consumer while leaving the banks looking like the big enemy.