Durbin Interchange Fee Amendment Sparks Big Industry Feud
The contentious lobbying battle between merchants and banks over Sen. Dick Durbin’s (D-Ill.) “interchange fee” amendment to the Wall Street bill is heating up in advance of House-Senate negotiations, which are scheduled to start when Congress returns next week.
Representatives from Speedway and SuperAmerica convenience stores announced Thursday a new set of nearly 1.7 million customer petitions asking Congress to enact interchange reform.
The 1.7 million signatures collected by the convenience stores in Indiana, Illinois, Kentucky, Michigan, Minnesota, Ohio, South Dakota, West Virginia and Wisconsin will be delivered to Members’ District offices during this week’s Memorial Day recess. This brings the total number of petition signatures across the country to 5.5 million.
Merchants are supporting the Durbin language, which would allow the Federal Reserve to regulate the fees, known as interchange fees, banks and card companies charge merchants to process credit and debit card transactions.
The amendment to the financial regulatory reform bill would also allow merchants to offer discounts to customers based on their payment method. Interchange fee legislation has not been voted on in the Senate.
Credit card companies such as Visa and MasterCard, along with big banks, community banks and credit unions, are opposed to the measure.
Durbin sent a letter last week to the CEOs of Visa and MasterCard telling them to stop threatening small banks with interchange fee changes and that coordination between large member banks to make changes to the fees and rules would raise questions of “unlawful restraint of trade.”
“It appears that in an effort to frighten small banks and credit unions into opposing the amendment, your companies are threatening to make changes to your small bank interchange fee rates and to your network operating rules,” Durbin wrote. “These changes, which are not in any way required by the amendment, are unnecessary and would disadvantage small card-issuing institutions. … The simple fact is that small banks would not be harmed or punished under the amendment unless your companies decide to harm or punish them.”
Still, credit card companies have been aggressively lobbying to make changes to the Durbin amendment.
Credit unions also have stepped up their efforts to oppose the bill. The National Association of Federal Credit Unions sent President Barack Obama, Federal Reserve Chairman Ben Bernanke and National Credit Union Administration Chairman Debbie Matz a letter Wednesday raising concerns that the proposal would do little to save consumers money.
“The way the proposed change to the law was drafted, there is no guarantee that any savings will be passed along to consumers, including the 92 million credit union members in this nation,” NAFCU President Fred Becker wrote.
Further, Becker wrote that the proposal would put credit unions on unequal footing with bigger banks, particularly in the debit card industry.
“The amendment authorizes the Federal Reserve to set debit interchange fees only for institutions with over $10 billion in assets,” Becker wrote. “However well intentioned this provision may be, it will do little, if anything to protect small institutions.”
National Association of Convenience Stores’ Lyle Beckwith said that the merchants would be open to changes to the amendment, but so far, according to Beckwith, the credit card industry has only been lobbying against the amendment.
“Up until now, all the talking points we’ve seen from them talk about killing the Durbin” amendment, Beckwith said.