In a letter dated June 16, Representative Debbie Wasserman Schultz (D-FL) and 130 other members of Congress outline their concerns with the Durbin Amendment that gives retailers and consumers relief from outrageous swipe fees, NACS reported.
They cite the benefits that all users of electronic payments systems receive and the “lack of Congressional review” of the interchange issue as reasons not to support the Senate-passed provisions.
“We wanted to share with you our grave concerns about the inclusion of an amendment that will regulate interchange fees – those fees paid between banks as part of every card transaction made by a consumer. This language will devastate credit unions and community banks, while providing no discernable benefits for consumers,” the letter noted.
Also on June 16, a hearing to investigate interchange fees was held by the Senate Appropriations Committee’s subcommittee on Financial Services and General Government, of which Sen. Richard Durbin is chairman. During the hearing, Durbin chastised the card industry for what he called its refusal to negotiate interchange rates, Digital Transactions reported. He also revealed he is working on a revision to his amendment that would exempt state prepaid card programs after some state treasurers expressed concern that Durbin’s amendment would hurt their programs.
The Senate version of a financial-services reform bill passed last month with the amendment, but a House version that emerged in December contains no such proposal. Congress has said it hopes to have a final bill ready for President Obama’s signature by July 4.
Durbin stressed repeatedly during the hearing-which featured six witnesses, including representatives of federal agencies, Amtrak, Visa Inc., a consumer activist, and an Illinois convenience-store chain-that interchange is non-negotiable and uncompetitive and criticized the cost the card networks’ pricing system imposes on taxpayers, Digital Transactions reported.
Gary Grippo, an official with the Treasury Department, said he had had little success in trying to negotiate interchange for the federal government, even though Treasury processed $8.6 billion in card transactions last year on behalf of 228 agencies, resulting in $116 million in interchange fees to the government.
“Our $8.6 billion may not be enough to negotiate with Visa and MasterCard,” Grippo told Durbin. “While we do aggressively compete to select an acquiring bank, interchange fees are not something that acquiring banks control.” Referring to the c-store chain whose chief executive would testify later, Durbin replied: “What chance does a Qik-N-Ez have if $8 billion doesn’t get you to the table?’
Today, Thursday, June 17, Congress is set to begin considering the Illinois Democrat’s amendment.