"It is one of the most active lobbying efforts I have ever seen,” quipped Senate Majority Whip Dick Durbin (D-Ill.) recently when asked about the fight over debit card swipe fees.
And that’s saying a lot, considering he’s been on Capitol Hill for 28 years.
The “Swipe Fee Fix,” which was passed as part of the sweeping financial overhaul legislation last year, caps the debit card fees that banks may charge retailers, requiring such charges to be “reasonable and proportional” to underlying costs. Retailers had long sought limits on these "interchange fees," which represent billions in revenue for banks -- $14 billion in fact.
The Federal Reserve is considering a proposal due to be finalized in April that would force banks to reduce their debit interchange fees to 12 cents per transaction, down from roughly 44 cents -- a difference that amounts to about $14 billion annually. This is why the banks are spending heavily on misleading ad campaigns that state the following: “Washington is helping giant retailers clean out your wallet; Washington is about to hand giant retailers a $14 billion pay day funded by you -- and your debit card.”
It’s part of the banks' latest scare tactics to make the big bad retailers the boogeyman. Unfortunately for the banks, however, thousands of local businesses -- from restaurants to florists, convenience stores to lumberyards -- like the newly passed law just the way it is. The banks’ hope, of course, is to overturn this provision in the law. But once Congress has done something, it is not easy to turn it around.
Jeremy Stine is manager of government and public affairs for the NLBMDA (dealer.org).