Swipe Fee Reform Attacked Sen. Durbin Said
Sen. Richard Durbin. Photo credit Daniel Schwen.
Banks and credit card companies have mounted a heavy lobbying effort to repeal debit card interchange fee reform Sen. Richard Durbin (D, Ill.) said on a March 24 conference call. He sponsored the legislation which was made into law last year. Swipe fees are the charges retailers must pay to banks every time a debit card is used to make a purchase.
“We knew at the time it was controversial, I did not anticipate the response we got this year,” Durbin told reporters. He said banks and credit cards have bankrolled a heavy campaign to repeal the law, or postpone a Federal Reserve decision on how much to scale back the fees. The decision is scheduled to be announced on April 21.
Banks and credit card companies are forecasted to lose $1.3 billion each month if swipe fee reform goes through Durbin said during the call. Mass retailers such as Wal-Mart will reportedly find great savings with swipe fee reform. But Durbin and others on the call cast the controversy over the bill as a fight between Main Street and Wall Street.
Art Potash, owner of the Chicago-area Potash Bros. Markets, said swipe fees are too heavy a burden for small business. “It is the third largest expense after payroll and insurance. The costs are too large to absorb and they must be passed onto the consumer,” he said.
Credit card company Visa made no comment on Durbin’s conference call. But on December 2010, it made a statement that debit fee reforms would impose artificial caps on swipe fees. “(It does) not realistically reflect the value of card acceptance and (does) not reflect the actual costs of running a secure, reliable and efficient debut network,” the Visa statement said.
