National Retail Federation Urges Lawmakers Not To Repeal Debit Card Swipe Reform

As the House Financial Services Committee considers approval of the Financial Choice Act, the National Retail Federation (NRF) is urging lawmakers to reject efforts to repeal debit card swipe fee reform.

“Debit card swipe fee reform has brought competition and transparency to the debit card payments market,” NRF Senior Vice President for Government Relations David French said. “Repealing reform would only undermine transparency and competition, further lining banks’ pockets.”

According to a press release, French’s comments came in a letter to the committee, which then started a debate on the Financial Choice Act — legislation sponsored by Chairman Jeb Hensarling, R-Texas, that would repeal debit swipe fee reform as part of a larger rollback of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Although only a single hearing has taken place and no retailers were allowed to testify, committee approval of the bill could come sometime this week, with a vote by the House expected later this month.

“Swipe fees are a major concern, especially for small retailers,” French said. “If debit swipe fee reform is repealed, costs to retailers will only increase, meaning higher prices for consumers and less opportunity for retailers to grow their businesses, provide jobs and support community efforts. Rather than repeal a successful provision of law that has brought competition into the payments market, we encourage Congress to support the future of payments and make sure competition is protected.”

While retailers did not testify, dozens held more than 100 meetings on the issue with lawmakers on Capitol Hill. The NRF submitted a statement for the record and is running digital ads. It has also delivered more than 7,000 email petitions addressing consumer benefits and competition that urge Congress to preserve debit card reform.

Debit reform was enacted as part of Dodd-Frank in response to the card industry’s practice of price-fixing the debit card “swipe” fees banks charge merchants to process transactions. The fees had averaged 1-2 percent of the purchase amount. Under reform regulations that took effect in October 2011, large banks are limited to $0.22 per transaction, down from about $0.45 in the past.

That limit saved retailers around $8.5 billion in the first year alone, with close to $6 billion of the savings passed along to consumers. The reform also required that merchants be given at least two choices in the networks that route debit transactions to the bank for processing, typically one controlled by Visa or Mastercard and a competing, independent network that offers advantages such as lower fees, better service or better security.



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