Retail

Retailers Head To DC To Uphold Swipe Fee Reform

As Congress moved to hold a hearing on legislation that would repeal the debit card swipe fee reform, retailers from across the U.S., along with the National Retail Federation (NRF), made a trip to D.C. to ask lawmakers to reconsider.

The fee caps were issued in response to a price-fixing practice by the card industry. Fees to process transactions previously averaged between 1 and 2 percent of the purchase amount. As of October 2011, reform regulations limited large banks to charging $0.22 per transaction.

The NRF argued that debit card swipe fee reform had saved merchants and consumers over $40 billion.

The House Financial Services Committee held a hearing yesterday morning on the Financial Choice Act, the legislation that would repeal debit swipe fee reform as part of a larger rollback of Dodd-Frank and the Consumer Protection Act.

No retailers were invited to testify at the hearing.

“Debit card reform has been a remarkable success,” NRF Senior Vice President and General Counsel Mallory Duncan said. “It has brought the beginnings of transparency and competition to a market where swipe fees were price-fixed and all banks linked arms to charge the same high fees. If reform is repealed, the big banks will go back to those practices, and nothing will stop them from setting these fees as high as they like and driving up prices paid by consumers in the process.”

Those who are most concerned about the prospect of a reversal in debit card swipe fee legislation would likely be the nation’s SMB retailers. A survey conducted by the NRF last year found that 89 percent of consumers thought the limit should remain in place.

The move comes as the Trump administration and Republican-controlled Congress are taking a critical eye toward every aspect of Dodd-Frank legislation. Likewise, U.S. banks have revved up their lobbying battle with the goal of ending the cap the current laws impose.

U.S. banks allege that swipe fee caps fail to help consumers and have added up to a $42 million windfall for retailers since being signed into law.

“This has been settled law for the better part of a decade,” Duncan said. “We should be looking at the future of payments rather than trying to re-legislate this important consumer protection and vital step forward for fair market competition.”

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