In the opening remarks of his interview with MasterCard’s President of U.S. Markets, Chris McWilton, FOX News’ Stuart Varney reiterated how the Durbin Amendment of the Dodd-Frank financial overhaul bill limits the amount card companies can charge merchants when a consumer opts to pay by debit.
“I am totally unaffected by this,” said Varney. “Why should I, a consumer, care?”
McWilton called Durbin “price fixing by the U.S. government” in response, stating that Senator Richard Durbin (D-IL) put the amendment into the Dodd-Frank bill at the 11th hour to cap how much networks like MasterCard can charge for debit card interchange fees. He also noted that the amendment went through without any congressional hearing.
On Feb. 17, the House Financial Services Committee is scheduled to hear testimony regarding the Federal Reserve’s proposal that would set a maximum of 12 cents per transaction for debit cards with no apparent distinction between signature and PIN. With Republicans now holding the majority in the House, McWilton is hoping the amendment might be reconsidered. (Related Article: Will the GOP Attempt to Repeal Dodd-Frank?)
Calling debit cards one of the instruments that has taken payments into the digital age, McWilton alleged that Sen. Durbin is trying to alter a system that already works well for consumers and merchants.
“What Senator Durbin has done is taken $14 billion per year out of the payment system today… the impact of that is going to be a $14 billion tax on the U.S. consumer,” claimed McWilton, because banks have to balance their books and will need to recoup the revenue lost from current interchange fee rates.
McWilton added that the Durbin Amendment does not require merchants to pass savings back to consumers. He expressed concern about the underbanked and unbanked being pushed out of the banking system, citing as an example a single mom who cannot afford to pay for a checking account.
“This is going to make the banks charge for services that historically U.S. consumers have gotten for free,” alleged McWilton. “Free checking is going to become a dinosaur. You are going to see charges for ATM fees.”
With regards to how MasterCard is fighting Durbin, McWilton said the company is trying to alert the public that the new regulations will significantly impact consumers.
“We’d love to reverse it, but we need dialogue,” said McWilton. “We need to get the American consumer to realize this is a $14 billion tax.”
However, McWilton does not think the new regulations will decrease debit card usage, due to its popularity as a payment vehicle. The Durbin Amendment is scheduled to take effect on July 21.
Click here to watch McWilton’s complete interview with FOX News. On MasterCard’s website, McWilton has also written a blog on Durbin entitled “Addressing the ‘D Word.”