The Senate’s rejection of an amendment offered by Senators Jon Tester (D-MT) and Bob Corker (R-TN) demonstrates the power of consumer and retail industry advocacy efforts and is a major victory for the convenience and fuel retailing industry, said NACS Chairman Jeff Miller.
The Tester-Corker amendment needed 60 votes for passage in the Senate, however it failed to clear this hurdle by a vote of 54 to 45. Defeat of the amendment, which sought to delay (i.e., effectively kill) debit card swipe fee reform and was intensely supported and funded by the country’s largest banks, removes the last hurdle to important debit swipe fee reforms mandated by Congress in 2010.
“This vote is an enormous win for consumers, since it fundamentally changes the rules in how banks collect $1 billion every month in debit swipe fees from consumers,” said Miller, who is president of Norfolk, Va.-based Miller Oil Co. “The vote means that consumers will now have a choice in how they pay for goods, and retailers will be able to provide incentives to reward customers for selecting lower-cost options, instead of funneling these costs directly to the banks. Today’s vote clearly shows the importance of making your voice heard,” continued Miller.
“This was a 10-year battle to kill the stranglehold that the banking industry has on how our country’s payment system operates and we were fighting against an opponent that has poured hundreds of millions of dollars into maintaining the status quo. Our convenience and fuel retailing industry played a leading role in this historic victory with petition campaigns from a record-setting 5.4 million consumers demanding change, the tens of thousands of letters and calls from retailers to Congress and the hundreds of personal visits that our members made to congressional offices both on Capitol Hill and in hometown offices,” he added.
Defeat of the amendment clears the path for the Federal Reserve’s final rules — due for release any day — on debit card reform to become law on July 21. The reforms limit price-fixing by the nation’s largest banks; they will now be required either to compete on their debit card swipe fees or charge an amount that is “reasonable and proportional” to their costs.
“While the banks continue to use fear tactics to mislead Americans about how this vote will affect them, the banking industry ironically is also a winner with today’s vote,” added Miller. “The Federal Reserve’s proposed rules would still allow banks to make a reasonable, if not sizable, profit on debit transactions. A survey of banks by the Fed found that debit swipe costs averaged around four cents per transaction, and the final rules are expected to set rates at least 300 percent above that rate — a profit margin that is unimaginable in our industry, which saw overall pretax profits of 1.1% in 2010.”
While this historic vote remains the last hurdle for implementation of debit swipe fee reform, plenty of work remains, said Miller. “We will work with the Federal Reserve and Congress to ensure that this remains a win for consumers and we will continue to push for other reforms in our payments system.”