WASHINGTON-The chief lobbyist for MasterCard told credit union leaders they were victimized by misinformation in the recent passage of amendment that will insert the Federal Reserve as regulator of interchange on debit cards.
Tucker Foote, VP-government affairs for the card giant, told NAFCU's Congressional Caucus that any reduction in interchange fees directed by the Fed as a result of the legislation will not be returned to the consumer, as its advocates claim, but will go retailers, especially a small group of some 100 companies that dominate the market.
"It a massive wealth transfer," Foote said. "The Durbin amendment is a massive wealth transfer from depository institutions to retailers. I don't think any one of the 64 senators who voted for the Durbin amendment would have voted for it if they knew what the effects were going to be."
Under the amendment, championed by Illinois Sen. Richard Durbin, the Federal Reserve will study interchange fees charged on debit transactions and direct they be reduced if the Fed determines they are inappropriate or do not fairly reflect the costs incurred in providing the service. The provision will also prohibit the two card giants, MasterCard and Visa, from barring retailers from offering consumers discounts for the use of cash or from prohibiting retailers from encouraging the use of cards with lower fees. It remains unknown whether the Fed will act to lower rates. Foote derided the retailers' claims that fees, which have tripled over the past decade to more than $60 billion a year, have skyrocketed, insisting that fee rates have remained relatively stable during that time, averaging about 1.74% per transaction a decade ago and 1.87% in 2008, even as the total dollar volume has soared producing much more revenue.
