June 28, 2011
Bloomberg ran an excellent retrospective today on “the story of the swipe-fee war” that recaps lobbying efforts by both retailers and financial institutions regarding the debate over lower debit card interchange rates.
The article opens with the story of Jennifer Cavallaro, who works at Beehive Café in Bristol, Rhode Island and was one of many recruits by the retail industry to travel to Washington to lobby for the 12-cent debit swipe fee cap. Here is an excerpt from the Bloomberg article, which open by discussing a change in Cavallaro’s usual Twitter blasts about egg salad specials:
“’Remember I went to DC?” she wrote. “Well believe it or not it worked! New law will cap fees for consumers and businesses soon!!!!’”
Cavallaro was a recruit in the retail industry’s surprise victorious assault on one of the most reliable income streams for big banks, worth $16 billion a year. Her message hailed the U.S. Senate’s decision that week to include a cap on debit-card fees in its bill overhauling rules for Wall Street.
Far from ending the matter, the vote touched off one of the most intense lobbying duels in memory as the banking industry, Visa Inc. (V) and MasterCard Inc. (MA) sought to kill or delay the debit- card measure. It raged for more than a year, culminating on June 8 when the banks lost a cliffhanger of a vote in the Senate.
The behind-the-scenes story of the swipe-fee war — reconstructed from public and confidential documents and interviews with more than 30 people in Congress, regulatory agencies and industry — shows how far the richest interest groups can go when a single decision puts billions of dollars up for grabs.” (Read complete article on Bloomberg.com)
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