NACS Opposes Bill to Repeal Durbin Amendment

Enactment of the legislation would cost consumers and small businesses billions in fees.

September 12, 2016

ALEXANDRIA, Va. – NACS issued a statement last week expressing its strong opposition to House Financial Services Committee Chairman Jeb Hensarling’s (R-TX) intention to hold debate on the Financial Choice Act (H.R. 5983), which includes a provision to repeal debit swipe fee reforms contained in the Durbin Amendment.  

“NACS is deeply disappointed that Rep. Hensarling will try to repeal debit swipe fee reform,” said NACS Senior Vice President of Government Relations Lyle Beckwith. “Repeal would allow the credit card Goliaths to resume price-fixing of debit-card fees and block smaller card networks from competing with them for business.

“Even with reform, the dominance of the Visa-MasterCard duopoly means retailers and consumers in the United States pay the highest swipe fees in the world—up to seven or eight times European levels.  Without the vital protections of debit reform and the small measure of competition it has introduced to the market, consumers would face higher prices and smaller merchants would face even greater burdens—especially convenience store owners. Higher swipe fees, which on average are the fastest-growing expense and second-largest operating cost for retailers, cost American consumers tens of billions of dollars every year.

“We strongly urge Congress to put the interests of merchants and consumers ahead of the credit card giants by voting against the Financial Choice Act.”

Six years ago, debit reform passed (with bipartisan support in the Senate) as an amendment—formally known as the Durbin Amendment—to the Dodd-Frank Wall Street Reform package. The reform stated that centrally price-fixed swipe fees on debit transactions had to be “reasonable and proportional” to the cost of processing the transaction. Importantly, the reform ensured that competition among debit networks continued.

Debit swipe fee reform has helped both merchants and consumers alike. Merchants have seen transparency for the first time when a customer swipes a debit card. And according to an economic report released by the Merchants Payments Coalition, cutting debit fees put $6 billion in consumers’ hands through lower prices and created more than 37,000 new jobs annually.

NACS is asking convenience retailers to reach out to their representatives and encourage them to oppose the Financial Choice Act as long as the provision to repeal the Durbin Amendment remains. In just a few minutes, industry stakeholders can send a letter to their members of Congress telling them how Hensarling’s legislation would affect their business and their customers.