WASHINGTON, D.C. — Retailers from all channels are joining efforts to keep financial reforms included in the Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act.
In a letter to Congress, a coalition of 407 big and small retailers urged lawmakers not to repeal reforms aimed at curtailing global credit and debit card companies' anti-competitive practices. The coalition includes convenience store retailers 7-Eleven Inc., Aloha Petroleum Ltd., CEFCO Convenience Stores, E-Z Mart Stores Inc. and RaceTrac Petroleum Inc.
According to the Merchants Payment Coalition, the reforms "brought some competition to the market where card companies had blocked their competitors from having the chance to process debit card transactions and price-fixed the fees big banks charge merchants for those transactions."
The coalition added the reforms — which included a cap on debit card swipe fees, also known as interchange fees — have ensured that card companies compete on price and security. However, the House Financial Services Committee is now considering legislation to eliminate these reforms as part of a broader plan to repeal Dodd-Frank.
In June, 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," as CSNews Online previously reported.
Within weeks, Rep. Jeb Hensarling (R-Texas) released a discussion draft of the Financial CHOICE Act, the Republican plan to replace the Dodd-Frank Act and promote economic growth. CHOICE stands for Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs.
However, retailers told lawmakers that repealing the debit card reforms would benefit no one but large card companies and banks.
"As cornerstones in the business community, we are staunch supporters of free enterprise, and generally do not support any market intervention unless markets are not functioning efficiently. Credit- and debit-card acceptance is a prime example of a non-functioning marketplace," the retailers wrote.
Reform opened the market by stopping the largest card companies, Visa and MasterCard, from paying banks to block competing card companies from carrying debit transactions, the coalition added.
That promotes competition by ensuring merchants have access to at least two competitive networks for routing their transactions. Also, banks are free to charge anything they want as long as they don't use the fees price-fixed by the credit card companies, the retailers explained.
"Debit card reforms have been a major step in the right direction and any removal of those reforms would be a monumental step in the wrong direction for U.S. businesses and consumers," they said.
To read the full letter and company list, click here.