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Coalition Asks New Congress to Protect Debit Reforms

NACS and 170 state and national merchant groups say repealing debit reform will remove all competition from the debit routing market.
January 5, 2017

​WASHINGTON – Now that a new Congress is in session, NACS and 170 state and national merchant groups are communicating to members of the U.S. Senate and House of Representatives the importance of keeping debit reforms in tact, which were enacted as part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.

“[T]he debit reforms contained in Dodd-Frank are unique in that they brought the first piece of competition and transparency into a market that was historically void of it. The reforms in the law have benefitted American consumers, merchants, small financial institutions and the economy as a whole. Repealing or weakening the law will provide a windfall for fewer than 2% of the country’s largest banks and remove any and all competition from the debit routing market. As representatives of retailers and employers from every state and congressional district in the country, we ask you to join us in opposing any effort to weaken or repeal these important debit reforms,” reads a January 4 letter to all members of Congress.

The letter continues that in 2010, American consumers and merchants successfully won a hard-fought battle over escalating, uncontrollable fees with the inclusion of the debit reform measures outlined in the Durbin Amendment..

“These reforms brought a level of transparency (for the first time, small businesses could see and know exactly how much they would be charged for a debit transaction from one of the covered institutions) and a level of competition into a market where fees were traditionally set collectively behind closed doors and without regard to the costs imposed on American consumers and Main Street retailers. It is important to note, this amendment passed with over 60 votes and strong bipartisan support after open debate on the Senate floor seven years ago. This was an essential first step to move America’s electronic payments system toward a truly open and free market.”

Reforming Dodd-Frank has been cited as a law President-elect Donald Trump will address when his administration takes over. And with 60 new members now in office to kick-start the 115th Congress, NACS and its industry allies are communicating the need to maintain current debit reforms.

“The law requires that each debit card have a minimum of two unaffiliated networks enabled on the card. By requiring two networks, the large card brands, such as Visa, actually now have to compete with other debit networks for retailers’ routing business. The result of the law has meant that networks compete on price, security and reliability in order to attract retailer business. … Repealing this provision would remove all competition from the debit market and make our national payment system less reliable and secure.”

Several lawmakers also want to repeal the swipe fee reforms NACS members fought hard to achieve. If debit reforms are repealed, retailers will once again be put under the price-fixing control of Visa and MasterCard, and the debit swipe fees you pay will skyrocket.

NACS members can also help ensure debit reforms are protected by writing to their U.S. representatives and asking them to oppose legislation that will obliterate current debit reforms.