NRF CEO Asks Retailers to Tell Congress to Keep Swipe Fee Amendment in Financial Reform Bill
By J. Craig Shearman
Washington Retail Insight
June 14, 2010
With nearly $20 billion at stake for the retail industry and a deadline for action approaching next week, NRF is rallying merchants to make sure an amendment requiring the Federal Reserve to determine “reasonable” swipe fees for debit card purchases remains in the final version of financial services reform legislation being negotiated in Congress.
“Congress needs to hear from every one of you,” NRF President and CEO Matt Shay said today. “Unless we all speak up now, a golden opportunity may be lost.”
“The banks and credit card companies will stop at nothing to strip these merchant- and customer-friendly provisions out of the proposed law,” Shay said. “NRF can’t match them without your support. We need every one of you to mobilize calls and e-mails to Congress.”
Shay’s comments came in a letter to CEOs of all NRF member companies asking them to encourage store managers, employees and customers to contact Congress and urge lawmakers to keep the swipe fee amendment in the bill. The request also went to heads of state retail associations and other national merchant associations.
Shay unveiled a grassroots link on the NRF web site where retailers can enter their Zip code and send an email to their members of the House or Senate. The page provides a sample email, but the message can be edited by the sender.
A House-Senate conference committee negotiating a final version of the Restoring American Financial Stability Act of 2010 held its initial meeting last week, but will begin the real work of debating and voting on details of the bill tomorrow and expects to continue meeting Wednesday and Thursday. The panel is trying to come up with a final bill by June 24. That would allow the House to take up the compromise measure on June 29 and the Senate to vote in time to have the bill on President Obama’s desk by Independence Day.
The key concern for retailers is an amendment sponsored by Majority Whip Richard Durbin, D-Ill., that would require the Federal Reserve to establish rules that would result in the setting of “reasonable and proportional” rates for the interchange or “swipe” fees that Visa and MasterCard banks charge merchants to process debit card transactions. The Fed would be required to take into consideration both the actual cost of processing the transactions and the fact that paper checks drawn on the same bank accounts are paid at face value.
The Senate approved the amendment by a nearly veto-proof margin of 64-33 in May, but the provision was not included in the House bill passed last November.
Enactment of the amendment would be a huge victory for retailers’ attempts to bring soaring swipe fees under control. Banks charge merchants an interchange fee averaging between 1 and 2 percent each time a debit card is swiped to pay for a transaction. The fees total about $20 billion a year and account for a significant portion of the $48 billion in total debit and credit card interchange that Visa and MasterCard banks collect annually.
The measure would also prohibit card companies from interfering with merchants’ ability to offer a discount or other benefit to customers who pay by cash, check or debit rather than credit card. Current federal law allows merchants to discount for cash or checks but doesn’t address debit. Despite that law, card industry rules and contracts effectively block merchants from offering a discount in actual practice.
The amendment would also keep card companies from penalizing merchants who set minimum or maximum purchase amounts for credit cards.
House Financial Services Committee Chairman Barney Frank D-Mass., and Senate Banking Committee Chairman Christopher Dodd, D-Conn., – who are heading the negotiations – said last week that the Durbin amendment is expected to remain in the final bill because of the overwhelming vote in the Senate. But they said the amendment could be subject to changes, raising the issue of whether the provision might be watered down before final passage. In order to achieve that, banks have sent thousands of messages in opposition to Capitol Hill.
© 2010 National Retail Federation
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