Momentum Builds Around Repealing Swipe Fee Reform
WASHINGTON, D.C. — A move to repeal swipe fee reform is gaining steam among federal lawmakers, but the retail community isn't ready to go down without a fight.
Earlier this week, U.S. Rep. Randy Neugebauer (R-Texas) introduced a bill, H.R. 5465, to repeal the section of the Consumer Financial Protection Act of 2010 relating to rules for payment card transactions, including what he called "the misguided debit swipe fee reforms introduced by the Dodd-Frank Act."
Debit swipe fee reform, also known as the Durbin Amendment, "represents an egregious example of the Federal government picking winners and losers. Simply put, it represents crony capitalism at its worst," according to Neugebauer.
"Prior to Dodd-Frank, merchants, banks, and payment networks were free to enter into contractual relationships to set certain fees for processing debit card transactions. Sen. Dick Durbin (D-Ill.) and the retail lobby sold Congress on the need for debit swipe fee reform under the guise that consumers would see significant savings if the government controlled the price of these transactions," he said.
Instead, Neugebauer said, several studies, including research from the Federal Reserve Bank of Richmond, have shown consumers have not received any passed-through savings. In addition, some small businesses and those with a high volume of small-dollar transactions are fairing worse with the price caps in place, he added.
"What the Durbin Amendment did do was artificially shift over $30 billion in revenue from one industry to another. Instead of promoting free market principles and technological innovation, such as enhanced data security capabilities, the Durbin Amendment was nothing more than a government action to manipulate the marketplace," Neugebauer said.
He added, "This legislation will restore competition in the marketplace, remove arbitrary government price caps, and ensure consumers have affordable access to basic banking services."
Neugebauer is chairman of the Financial Institutions and Consumer Credit Subcommittee of House Financial Services Committee.
Retail associations including NACS, the Association for Convenience & Fuel Retailing, and the Retail Industry Leaders Association (RILA) are speaking out against the bill, which comes a week after U.S. Rep. Jeb Hensarling (R-Texas), chairman of the House Financial Services Committee, proposed replacing the 2010 Dodd-Frank Act, as CSNews Online previously reported.
"NACS is deeply disappointed that Rep. Neugebauer has introduced a proposal to repeal debit swipe fee reform. The proposal would allow credit card Goliaths to resume price-fixing of debit-card fees and add new costs for consumers and small retailers," said Lyle Beckwith, senior vice president for government relations at NACS.
According to Beckwith, even with reform, U.S. retailers and consumers pay the highest swipe fees in the world — up to seven or eight times European levels.
"We strongly urge Congress to put the interests of consumers, merchants and the economy as a whole ahead of the desire by the credit card giants to resume fixing prices without limitation," he added.
RILA also voiced opposition to Neugebauer's bill.
"Repealing Durbin would once again allow banks and card networks to impose outrageous fees on merchants across the country, while hurting everyone outside Wall Street," said Austen Jensen, RILA's vice president for government affairs. "RILA and the broader merchant community will fight any effort to repeal these reforms and we urge members of Congress to do the same."