Swipe Reform Delays Draw Bi-Partisan Reaction
WASHINGTON -- After months of hearings and lobbying efforts on both side of the issue, two bills seeking to delay swipe fee reform have been introduced to Congress, and the "kill bills" (as delay proposals are sometimes referred to) have caught some elected officials off guard.
"I am surprised swipe reform fees became a major issue again," said Rep. John Shimkus (R-IL). "I think most members, for us, thought the fight was over. I will be surprised if this moves anywhere."
Shimkus, speaking with the media during a NACS Industry Advocacy Briefing, was referring to a bill introduced by Sen. John Tester (D-MT) earlier this week that seeks to delay swipe fee reform for two years, as CSNews Online reported.
Shimkus' comments came just hours before another bill, sponsored by Rep. Shirley Moore Capito (R-WV), was introduced. This bill calls for swipe fee reform to be delayed for a year while a comprehensive study on the effects of the Durbin amendment and the Federal Reserve's proposal is conducted.
As it stands now, the Federal Reserve is expected to finalize its proposal by April 21, with implementation on July 21.
Two segments of the financial industry who have voiced concerns with reform have been the small banks and credit union industries; however, the proposals being debated by the Federal Reserve would offer a $10-billion exemption, effectively protecting them, Shimkus said. "Never underestimate the fiscal crisis we are in and pinned at who? The feet of the big banks," he explained, adding that small banks may be hesitant to go against the status quo.
Rep. Bill Shuster (R-PA) also does not see a reason to delay any reform. "There have been numerous hearings on [swipe fee reform] and I don’t think there is any reason to delay it," he said. "It is pretty clear that something needs to be done." He added that big banks argue reform will cost them money, but on the other hand the fees have been costly to retailers for years.
"[These] bills call for delay but they really seek to derail," Rep. Peter Welch (D-VT), a lead proponent for swipe fee reform, explained. "Retailers don't have millions of dollars to put forth a six-week lobbying effort but they need to be mobilized."
On one side of the issue are Visa and MasterCard and the big bank approach, which has the companies earning a profit any time a merchant makes a sale and the customer uses a debit card, Welch explained, adding the fees they have been charging have not been subject to competition. This is contrast to the merchant approach, which offers a good service on quality products in a clean establishment. "This affects hundreds of mom and pop merchants across the country who literally have no bargaining power," he said.