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House not to try repeal of debit card swipe fee reform
27 May '17
3 min read
The National Retail Federation have welcomed reports that House Republican leaders plan to abandon an attempt to repeal debit card swipe fee reform that has saved retailers and their customers more than $40 billion and brought badly needed competition to the payments market. Repeal of swipe fee reform would have come as part of the Financial Choice Act.
“This is a major victory for the consumers who have saved billions of dollars under swipe fee reform and for the communities where retailers have used swipe savings to improve customer service, create jobs and boost the local economy. Repeal of reform would have allowed banks to return to the uncompetitive market that allowed them to set these fees as high as they liked. The progress that was made toward competition would have been lost, and consumers would have seen nothing but higher prices,” NRF senior vice president and general counsel Mallory Duncan said.
The Financial Choice Act is a broad bill that would roll back banking regulations established in 2010 under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The House is expected to vote on the bill after it returns from its Memorial Day recess in June, and leadership conducted a whip count to determine support for the overall measure and provisions such as the repeal of swipe fee reform. A number of Republican House members expressed concerns about repealing swipe reform, and reports indicate that agreement has been reached to drop the provision.
NRF led the retail industry’s efforts to protect swipe fee reform, running a campaign that included both digital advertising and radio commercials.
Debit reform was enacted as part of Dodd-Frank in response to the card industry’s practice of price-fixing the debit card “swipe” fees banks charge merchants to process transactions. The fees previously averaged One-two per cent of the purchase amount, and virtually all banks that issue cards charged the same.
Under reform regulations that took effect in October 2011, large banks are limited to 22 cents per transaction, down from an average 45 cents in the past. The limit saved retailers about $8.5 billion in the first year alone, with close to $ six billion of the savings passed along to consumers, according to a study by economist Robert Shapiro. Banks that set the fees competitively and independently are exempt from the limit, but virtually none have done so. Banks with under $10 billion in assets are also exempt.
Reform also required that merchants be given at least two choices in the networks that route debit transactions to the banks for processing, typically one controlled by Visa or MasterCard and a competing, independent network that can offer advantages such as lower fees, better service or better security. (SV)
“This is a major victory for the consumers who have saved billions of dollars under swipe fee reform and for the communities where retailers have used swipe savings to improve customer service, create jobs and boost the local economy. Repeal of reform would have allowed banks to return to the uncompetitive market that allowed them to set these fees as high as they liked. The progress that was made toward competition would have been lost, and consumers would have seen nothing but higher prices,” NRF senior vice president and general counsel Mallory Duncan said.
The Financial Choice Act is a broad bill that would roll back banking regulations established in 2010 under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The House is expected to vote on the bill after it returns from its Memorial Day recess in June, and leadership conducted a whip count to determine support for the overall measure and provisions such as the repeal of swipe fee reform. A number of Republican House members expressed concerns about repealing swipe reform, and reports indicate that agreement has been reached to drop the provision.
NRF led the retail industry’s efforts to protect swipe fee reform, running a campaign that included both digital advertising and radio commercials.
Debit reform was enacted as part of Dodd-Frank in response to the card industry’s practice of price-fixing the debit card “swipe” fees banks charge merchants to process transactions. The fees previously averaged One-two per cent of the purchase amount, and virtually all banks that issue cards charged the same.
Under reform regulations that took effect in October 2011, large banks are limited to 22 cents per transaction, down from an average 45 cents in the past. The limit saved retailers about $8.5 billion in the first year alone, with close to $ six billion of the savings passed along to consumers, according to a study by economist Robert Shapiro. Banks that set the fees competitively and independently are exempt from the limit, but virtually none have done so. Banks with under $10 billion in assets are also exempt.
Reform also required that merchants be given at least two choices in the networks that route debit transactions to the banks for processing, typically one controlled by Visa or MasterCard and a competing, independent network that can offer advantages such as lower fees, better service or better security. (SV)
Fibre2Fashion News Desk – India
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