Senator Durbin Sets Record Straight on Swipe Fee Reform
WASHINGTON, D.C. -- Opposition to a proposed credit card swipe fee settlement has once again pitted the retailer community against the banking community on Capitol Hill.
In a Sept. 20 letter to leaders in Congress, Frank Keating, president and CEO of the American Bankers Association, asked Congress to urge both sides of the issue to come to the table and work out the differences themselves. He called the consequences of the Durbin Amendment, which led to debit card swipe fee reform last year, intrusive. "We do not believe it is in the interest of policymakers or the consumers they represent to repeat the mistakes of the past by expanding price controls to more aspects of our economy," he wrote.
That letter is now drawing a sharp response from U.S. Sen. Dick Durbin (D-Ill.), who sent his own letter to Keating to "set the record straight" on swipe fee reform.
"Last week you sent a letter to the United States Congress in which you criticize the debit interchange reform law that Congress enacted as a 'mistake,'" Durbin wrote. "While the banking industry may resent that its enormous lobbying effort did not produce a different outcome, a defeat is not the same as a mistake.
"Main Street businesses all across America that were previously being crushed by ever-rising debit swipe fees are now seeing real relief. This relief has been achieved without any significant negative impact on the small banks and credit unions that were exempted from interchange regulation -- in fact, these small financial institutions have been thriving since reform took effect," he continued. "Many consumers have been able to receive discounts for buying products such as gasoline and airline tickets with their debit cards, and many more have benefitted as merchants have been able to keep prices down as a result of lower interchange costs. Far from being a mistake, debit interchange reform is showing real results."
In his letter sent last week to Sen. Harry Reid (D-Nev.), Sen. Mitch McConnell (R-Ken.), U.S. Rep. John Boehner (R-Ohio) and U.S. Rep. Nancy Pelosi (D-Calif.), Keating called the proposed credit card deal -- which was reached in mid-July -- "a historic opportunity for policymakers to put the debate over further government price controls behind them. While the settlement comes at a significant cost to financial institutions, it ultimately works to the benefit of consumers and the payments system as a whole."
He said that the deal on the table to end the seven-year legal battle provides an estimated seven million merchants with more than $7.2 billion in payments and includes several significant structural reforms that will enable all merchants to negotiate better terms over the level of interchange that applies to credit card transactions. "In sum, the settlement -- voluntarily entered into by retailers, financial institutions and card networks -- represents a market solution that resolves the outstanding disputes raised by the parties involved," Keating wrote.
As CSNews Online has previously reported, the proposed settlement reached in U.S. District Court in Brooklyn, N.Y. has faced criticism from many in the retail community. NACS, the Association for Convenience & Fuel Retailing, immediately came out against the deal. NACS is a plaintiff in the lawsuit with Visa, MasterCard and more than a dozen of the country's largest banks that issue the companies' cards. Its opposition was soon followed by others, including the National Retail Federation, the Retail Industry Leaders Association and the Society of Independent Gasoline Marketers of America. Target and Walmart have also spoke out against the settlement.
The plaintiffs in the lawsuit have until Oct. 19 to formally request approval of the settlement.