Durbin Calls for Further Changes in Swipe Fee Reform

In an op-ed, the Illinois senator declared that current fees don’t do enough to help retailers or consumers.

September 25, 2015

WASHINGTON, D.C. – Illinois Sen. Dick Durbin, who authored the legislation meant to regulate payment transaction fees back in 2011, challenged the Federal Reserve today to do more to enforce fair debit card interchange fees. Writing an op-ed article for American Banker, Sen. Durbin declared that the current fees don’t do enough to help either retailers or consumers.

Current debit card interchange rates can be “charged at an unreasonably high level that far exceeds the real costs of transactions,” Sen. Durbin wrote. “The Fed's final rule failed to adequately follow the law I wrote and did too little to rein in the lucrative swipe fee price-fixing scheme created by Visa, MasterCard and debit card-issuing banks. Under the Fed's rule, Visa and MasterCard have gleefully raised swipe fee rates on many types of debit transactions, boosting the profits of their big-bank allies but hurting Main Street businesses and their customers.”

Sen. Durbin added in his article that, “It's time for the Fed to stop giving deference to the banking industry and correct the industry's swipe fee increases on small-ticket transactions. The point of the law was to curb swipe fee abuses, not make them worse.”

Earlier this year, in a white paper compiled from issue-reported surveys to the Federal Reserve, the Merchants Advisory Group reports that while debit costs have decreased substantially in the five years since the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act, there have been no coinciding changes to existing debit fee regulations. According to the survey data, issuer costs have decreased from 7.6¢ per transaction to 4.4¢ per transaction—a 42% reduction—yet, merchants, and ultimately consumers, continue to bear unreasonable and inflated costs associated with debit card acceptance. This discrepancy runs counter to the purpose of the Durbin Amendment in Dodd-Frank.

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