Retailers win debit card fee battle

WASHINGTON -- The Senate last week rejected a banking lobby effort to delay new federal regulations that would lower so-called "swipe" fees that merchants are charged on debit card purchases.

Sens. Jon Tester, D-Mont., and Bob Corker, R-Tenn., had proposed to delay for up to a year the implementation of a new Federal Reserve rule that would cap the interchange fees well below the 44-cent average banks now get per transaction.

The Fed is expected to publish a final version of the rule in the next few weeks, and the cap is scheduled to take effect July 21.

Congress required the Fed to regulate interchange fees for banks with assets of more than $10 billion as part of banking reform legislation adopted last year. Sen. Dick Durbin, D-Ill., had proposed the amendment to regulate the fees.

The banking industry spent millions of dollars lobbying for a delay. Meanwhile, retailers lobbied as aggressively to move forward with the cap they claim will save consumers about $14 billion a year.

"Most consumers don't even know these fees exist, but they are costing the average family hundreds of dollars each year and our economy billions of dollars," said Mallory Duncan, National Retail Federation senior vice president and general counsel.

Frank Keating, president of the American Bankers Association, said the pending rule would result in "significant harm" for community banks and their customers while "big-box retailers" reap unjustified profits.

"Community banks, the backbone of local communities, will suffer the most. They will see a reduction in a key source of revenue that allows them to offer low-cost banking services to everyday consumers and supports lending and fraud protection measures," Keating said.

Sen. Kay Hagan, D-N.C., said she favored giving regulators "the time and the tools" needed "to get this rule right." She said the proposed delay was a "bipartisan, balanced compromise" to address concerns raised by regulators, small debit card issuers and many of her colleagues.

Durbin said the Senate should let the Fed issue the rule.

"If more needs to be done, I'm on board; but the notion that we can't even trust the Federal Reserve to come up with a rule on this is just plain unfair," Durbin said.

Corker acknowledged the issue is contentious and that most lawmakers would rather not have to cast a vote because "people have friends who are retailers, people have friends who are bankers, and they hate to choose between their friends."

The vote was 54-45, six short of the 60 needed to move debate forward.

Sen. Dean Heller, R-Nev., voted for the one-year delay. Sen. Harry Reid, D-Nev., voted against the delay.

Small-business proposal
fails in Senate

A proposal aimed at reducing the impact of regulations on small businesses failed to move forward in the Senate.

Sen. Olympia Snowe, R-Maine, and Sen. Tom Coburn, R-Okla., proposed that federal agencies review the direct and indirect cost of regulations on small businesses.

"The failure of agencies to regularly review regulations with an eye toward reducing needless burden stifles small business's ability to grow, plan for the future, and create jobs," Snowe said.

Opponents argued that the Senate should hold hearings on the issue before adopting such a law. The vote was 53-46, seven short of the 60 needed to adopt the Snowe amendment.

Heller voted for the proposal. Reid opposed it.

The House was in recess last week.

Contact Stephens Washington Bureau
reporter Peter Urban at purban
@stephensmedia.com or at 202-783-1760.