Retailers want debit-card swipe fees lowered to save shoppers money. Bankers
oppose the measure, saying it could cripple community banks and drive up the
cost of services.
The debate is raging in Washington against a backdrop of helping
consumers hold on to every little bit they can in a lukewarm recovery and
keeping banks' service levels intact.
To drive their point home -- that lowering the swipe fees banks charge
retailers to process debit-card transactions could result in savings of $1
billion a month, which could be passed on to consumers -- the National Retail
Federation and the S.C. Merchants Association hit the airwaves this week to
coax South Carolina's U.S. senators to stand with them.
"Two out of every $100 we spend in stores or online go to the credit-card
industry," an announcer says in the new radio ads. "America needs swipe-fee
reform now, not later. Call Senators Graham and DeMint today. Tell them to
stop the big-bank credit-card industry from swiping our money."
The one-minute ads are running on stations across the state this week as
part of the retail federation's nationwide 60-day lobbying, grass-roots and
media campaign aimed at ensuring that swipe-fee reform passed by Congress last
year goes into effect as scheduled on July 21.
Retail groups say a provision in the 2010 Wall Street reform bill will reduce the fees by an estimated 70
percent, saving about $14 billion a year that retailers plan to pass along to
their customers through discounts or other benefits.
"Congress concluded last year that swipe fees have been driving up prices
for consumers by far too much for far too long," NRF President and CEO Matthew
Shay said. "Now that Congress has done something about these fees, retailers
are ready to pass the savings along to customers through lower prices and
higher value. We want to make sure swipe-fee reform takes effect as planned,
and consumers get to enjoy those new benefits as soon as possible."
S.C. Merchants Association President Fran Preston said, "We want our
senators to know how important swipe-fee reform is to Main Street businesses
and consumers. These fees are driving up prices for South Carolina citizens at
a time when the economy is still recovering. South Carolina doesn't want
swipe-fee reform delayed."
The American Bankers Association calls the measure bad public policy that
will insert the government into a price-fixing role and wants the issue
studied further before it takes effect.
"We strongly support Congress stepping back and looking at this again,"
ABA chief counsel Ken Clayton said. "It will cause dramatic harm to consumers,
community banks and the communities they serve."
Clayton said the higher swipe fees support fraud protection and allow for
lower-cost banking for the poor and free checking for millions of Americans.
"The proposals pushed by the retail community will hurt consumers, and we
will see higher costs at banks and increased profits at big-box retailers,"
Clayton said.
U.S. Sen. Lindsey Graham voted in favor of swipe-fee reform when the Wall
Street reform bill was considered in Congress last year, but U.S. Sen. Jim
DeMint voted against the provision.
"Sen. DeMint opposed (the measure) last year because it gave too much
power to the Federal Reserve to add a new layer of regulations that will
ultimately burden consumers," said the senator's spokesman, Wesley Denton.
Legislation introduced in March by Sen. Jon Tester, D-Mont., would delay
implementation of swipe-fee reform by two years and require a new government
study of the issue.
Earlier this month, he said he would modify the bill to seek a 15-month
delay, including a six-month study, six months for the Federal Reserve to
draft new regulations replacing those proposed in December and three months to
prepare for implementation.
"These misguided regulations need to be stopped, not delayed," Denton
said on DeMint's behalf. "If Sen. Tester's bill is brought to the floor, Sen.
DeMint will offer an amendment to repeal the entire Dodd-Frank financial
regulation bill that is destroying jobs and dragging down our economy."
Swipe fees, officially known as interchange fees, are a charge averaging
1 percent to 2 percent for debit cards and 2 percent to 3 percent for credit
cards taken by banks each time a card is used to pay for a purchase. The fees
have tripled over the past decade to about $50 billion a year and cost
consumers an estimated $427 for the average household. Debit cards account for
about $20 billion of the total.
Congress has yet to deal with credit-card swipe fees but included
swipe-fee reform for debit cards in last year's Wall Street bill. Regulations
proposed by the Federal Reserve to implement the provision would lower
debit-card swipe fees from their current level to a flat fee of no more than
12 cents per transaction for large banks that adhere to fee schedules set by
the card companies.
Banks that set their own rates would be free to charge any fee they think
the market would bear provided that they do so independently. Financial
institutions with less than $10 billion in assets are exempt.
