Sen. Durbin, Rep. Welch Speak Out on Swipe Fee Repeal Efforts

Champions of 2010 debit swipe fee reform say that repealing the Durbin Amendment will double bank debit fees and decrease competition.

March 02, 2017

WASHINGTON – This week, Sen. Richard Durbin (D-IL) and Rep. Peter Welch (D-VT) penned an op-ed in a widely-read Capitol Hill newspaper to urge members of Congress to vote against a Wall Street windfall.

“Big banks are making record profits these days, but they want more. Now they want Congress to double the fees big banks receive every time a debit card is swiped. This would be a gut punch to Main Street merchants who are already paying $18 billion per year in debit swipe fees, and lead to higher prices for consumers at the checkout counter and at the gas pump,” Durbin and Welch co-wrote in The Hill.

They cited legislation authored by Rep. Jeb Hensarling (R-TX) that he will soon reintroduce to Congress, calling it “his massive Wall Street giveaway bill” that is expected “to include a repeal of a 2010 law, known as the Durbin Amendment, which finally reined in the debit swipe fee fixing that Visa and MasterCard created on behalf of the financial industry.” 

If debit swipe fee reform law is repealed, “Visa and MasterCard will once again be allowed to fix fee rates like they used to. Big bank fee rates will double, giving an estimated $8 billion per year windfall to Wells Fargo and other bank giants, the equivalent of a multibillion-dollar tax increase on retail purchases,” Durbin and Welch wrote, adding that the law also put an end to Visa and MasterCard’s anti-competitive habit of paying incentives to banks to block other debit card networks from handling the banks’ transactions.

“Repealing this would likely be the death knell for small debit networks that are desperately trying to compete with Visa and MasterCard. This is why Visa, MasterCard and their bank allies want repeal—they want to kill competition.”   

The members also called for Congress to “think hard” about the future of American transactions and the entities that are trying to control the system:

“Visa and MasterCard dominate the electronic payments industry, and for years they have been allowed to dictate the rules governing fees, security standards and card acceptance. They set these rules in ways that entrench their market dominance and maximize fees for themselves and their bank partners, even if competition, security and the consumer experience suffer as a result. For example, why is the U.S. the only major economy that uses chip cards without PINs when chip and PIN is faster and more secure? Because we let Visa, MasterCard and their bank allies set the rules, and they make more in fees when PINs are not used.”

For many years, NACS has worked closely with Durbin and Welch on Swipe fees, and both have been the champions for retailers and consumers since the early stages nearly a decade ago. Their op-ed sends a clear message that not only will they, along with the convenience and fuel retailing industry, continue fighting to protect debit swipe fee reform, but that the threat posed by Hensarling’s legislation is very real.

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