Retail Industry Hails Passage of Interchange Fee Amendment
Retailers across the industry spectrum, including those in the grocery channel, applauded the Senate’s passage last week of an amendment to the pending Restoring American Financial Stability Act of 2010 (S. 3217). Sponsored by Sen. Richard Durbin (D-Ill.), the amendment, which passed by a bipartisan vote of 64 to 33, authorizes the Federal Reserve to make rules that debit interchange fees are reasonable and proportional to the actual cost incurred by payment card networks.
Additionally, the amendment enables merchants to offer discounts or incentives for customers to use competing card networks and for customers to pay by cash, check or debit card, as well as allowing retailers to choose to set a minimum or maximum amount to use a credit card. Such practices are currently prohibited under current credit card network rules.
“This is a great victory for consumers and retailers, small and large,” said John Emling, SVP for government affairs at the Arlington, Va.-based Retail Industry Leaders Association (RILA). “[T]he U.S Senate has stood up to defend consumers and retailers, small and large, protecting them from the excessive fees and anticompetitive practices imposed by big banks and credit card companies.”
The response was similar from the grocery retailing community. Food Marketing Institute president and CEO Leslie G. Sarasin called the vote “a major stride toward restoring fairness and reason to the debit card interchange fee system …. Requiring that the fees be based on the actual cost of debit card payments will generate significant savings, benefiting retailers and, ultimately, consumers.”
Sarasin further noted that “[c]ustomers will benefit, as the amendment allows retailers greater flexibility in offering them discounts for lower-cost forms of payment.
“Sen. Durbin is to be commended for his determination and leadership in support of efforts by merchants to level the playing field against the unfair and anti-competitive interchange fees and restrictive practices that have been set by the credit card networks and their largest banks,” said Tom Wenning, EVP and general counsel at the Washington-based National Grocers Association. “This is a significant win for consumers and merchants who will benefit from these reforms”
With that legislative hurdle out of the way, retailing organizations shifted their focus to getting the Restoring American Financial Stability Act of 2010 passed and signed into law, pledging to work with lawmakers toward “the creation of a truly competitive and transparent interchange fee systems,” in Sarasin’s words.
The Merchants Payments Coalition, a Washington-based group of supermarkets, drug stores, convenience stores, fuel stations, online merchants and other businesses that was formed to put an end to exorbitant credit card fees, sent a letter last week to all 100 senators urging them to vote for the bill.
“The passage of the Durbin amendment makes the financial reform bill a must-pass piece of legislation for Main Street businesses and their customers,” said Jennifer Hatcher, group VP of government relations at coalition member FMI. “We will continue to do everything we can to support financial reform and ensure the bill sees the same bipartisan backing as the amendment.”
The 10 largest banks collect over 80 percent of all interchange or swipe fees. The amendment affects banks only with $10 billion or more in assets, the coalition noted, thus exempting almost all community banks and credit unions, which combined collect just a fraction of the total interchange fees collected yearly.
Additionally, the amendment enables merchants to offer discounts or incentives for customers to use competing card networks and for customers to pay by cash, check or debit card, as well as allowing retailers to choose to set a minimum or maximum amount to use a credit card. Such practices are currently prohibited under current credit card network rules.
“This is a great victory for consumers and retailers, small and large,” said John Emling, SVP for government affairs at the Arlington, Va.-based Retail Industry Leaders Association (RILA). “[T]he U.S Senate has stood up to defend consumers and retailers, small and large, protecting them from the excessive fees and anticompetitive practices imposed by big banks and credit card companies.”
The response was similar from the grocery retailing community. Food Marketing Institute president and CEO Leslie G. Sarasin called the vote “a major stride toward restoring fairness and reason to the debit card interchange fee system …. Requiring that the fees be based on the actual cost of debit card payments will generate significant savings, benefiting retailers and, ultimately, consumers.”
Sarasin further noted that “[c]ustomers will benefit, as the amendment allows retailers greater flexibility in offering them discounts for lower-cost forms of payment.
“Sen. Durbin is to be commended for his determination and leadership in support of efforts by merchants to level the playing field against the unfair and anti-competitive interchange fees and restrictive practices that have been set by the credit card networks and their largest banks,” said Tom Wenning, EVP and general counsel at the Washington-based National Grocers Association. “This is a significant win for consumers and merchants who will benefit from these reforms”
With that legislative hurdle out of the way, retailing organizations shifted their focus to getting the Restoring American Financial Stability Act of 2010 passed and signed into law, pledging to work with lawmakers toward “the creation of a truly competitive and transparent interchange fee systems,” in Sarasin’s words.
The Merchants Payments Coalition, a Washington-based group of supermarkets, drug stores, convenience stores, fuel stations, online merchants and other businesses that was formed to put an end to exorbitant credit card fees, sent a letter last week to all 100 senators urging them to vote for the bill.
“The passage of the Durbin amendment makes the financial reform bill a must-pass piece of legislation for Main Street businesses and their customers,” said Jennifer Hatcher, group VP of government relations at coalition member FMI. “We will continue to do everything we can to support financial reform and ensure the bill sees the same bipartisan backing as the amendment.”
The 10 largest banks collect over 80 percent of all interchange or swipe fees. The amendment affects banks only with $10 billion or more in assets, the coalition noted, thus exempting almost all community banks and credit unions, which combined collect just a fraction of the total interchange fees collected yearly.