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Michigan Credit Union League Home » Information Services » Publications » News Articles  

News Report: Swipe Fees Battle May Move to States   (Misc News: June 2, 2011)

Retailers’ associations have said for months that they would continue to accept higher-cost debit cards from small issuers, but now comes news that they are backing bills in state legislatures that would give them authority to turn down cards based on the fees they carry.

A story posted Thursday in Roll Call, the newspaper of Capitol Hill, said that industry representatives in Minnesota, Maine, Massachusetts and Rhode Island were backing bills that would allow retailers to pick cards based on the fees they carry. Click here to read the full story.

Credit unions, along with banks and credit card companies, are currently waging a battle to overturn the Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act that would limit so-called “swipe fees” to just 12 cents per transaction. Currently, swipe fees average about 44 cents per transaction. The bill includes a provision exempting small issuers, those under $10 billion in assets from the new rules.

Retailers have said that they would continue to accept the higher-cost cards, but many in the financial institutions community, plus most regulators, have said that they didn’t think the carve-out for small issuers would work in the marketplace.

The Roll Call story shows that while the trade groups for retailers say they will accept the higher-cost cards, they are working to make sure they don’t have to accept them.

"Durbin gets up and says, 'We are trying to protect Main Street banks,' but in the state legislatures, they are trying to do an end-run around the small bank protections," Roll Call quoted an unnamed lobbyist for the credit card industry as saying.

Roll Call said the state bills have gained little traction. And in Washington, lobbyists for retailers said they are not concerned about being able to choose between banks or products.

"It's not exactly a great win for us if retailers can refuse a high-cost debit card," said David French, the National Retail Federation's top lobbyist. "If a customer only has one card in his wallet, the retailer's options are take a higher-cost credit card or a lost sale."

The credit card industry pounced on the state efforts. If retailers can deny cards that cost them more, eventually small banks will have to lower their fees or leave the debit card business altogether, the credit card lobbyist said.

A Senate vote on delaying interchange could come as soon as Wednesday, Roll Call said.


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