The National Retail Federation sent a letter to all members of the U.S. Senate asking them to vote against a so-called “compromise” amendment offered by Senator Jon Tester, D-Mont., that would delay a new federal law intended to save retailers and consumers more than $1 billion a month by lowering “swipe” fees banks charge to process debit card transactions.
“This bill is no compromise,” NRF Senior Vice President for Government Relations David French said. “It is a sham intended to kill swipe fee reform even more quickly than his original bill and should be seen for what it is.”
Tester offered an amendment that would delay swipe fee reform by one year rather than the two years proposed under legislation he introduced earlier this spring. But the amendment goes further than the original bill by mandating that the Federal Reserve take into consideration a broad range of costs rather than those associated specifically with the cost of processing transactions.
“Retailers and their customers could be forced to subsidize banks” costs of installing new ATM machines or building new branches,” French said. “Even Wall Street bonuses and exotic junkets are likelyto be considered costs under Senator Tester’s new language. Rather than bringing fees down, this amendment will force swipe fees even higher.”
A swipe fee reform provision included in last year’s Wall Street law is scheduled to take effect July 21. The provision would reduce the fees by an estimated 70 percent, saving about $14 billion a year that retailers plan to pass along to their customers through discounts or other benefits, but the banking industry is spending millions of dollars to delay reform.
Regulations proposed by the Federal Reserve to implement the provision would lower debit card swipe fees from their current level of 1 to 2 percent of each transaction to a flat fee of no more than 12 cents per transaction for large banks that adhere to fee schedules set by the card companies. Banks that set their own rates would be free to charge any fee they believe the market would bear provide that they do so independently. Financial institutions with less than $10 billion in assets are exempt.
