WASHINGTON — Locating a spot causes enough angst, but now parking in the nation’s capital is also being dragged into the controversy over swipe fee limits.
Parkmobile USA, a mobile payments company with an exclusive contract for D.C. municipal parking areas, is fielding sharp criticism from backers of the so-called Durbin amendment after telling users that a new customer fee hike was the result of the provision in the Dodd-Frank Act.
The company told Washington customers in an email last week that parking transaction fees would rise to 45 cents from 32 cents beginning Oct. 29. The added costs are “triggered by recent federal legislative reform enacted by the Dodd-Frank Wall Street Reform and Consumer Protection Act’s Durbin Amendment,” the email said.
That provision, authored by Sen. Dick Durbin, D-Ill., directed the Federal Reserve Board to set a cap on the fees debit card providers charge merchants for payment processing. The Fed’s interchange fee cap of about 24 cents per debit transaction went into effect in October 2011.
But the debate over swipe fees has not ended. While proponents of the cap argued it would lead to lower prices on goods, critics said financial institutions would have to up customer fees on other banking products to account for lost payment-processing revenue. To this day, banks and merchants continue to clash over whether small businesses and consumers will ultimately benefit from the cap.
In a response Friday, Durbin called out Parkmobile for attributing the fee increases to his amendment, and asked the company to “retract these misleading communications.” The increased customer costs, he said, resulted from policies imposed by the large card networks, not his legislation.
“My amendment did not raise fees, it put a ceiling on them. Visa and Mastercard raised these fees and as a merchant, you were helpless to stop them short of the ceiling the new law created,” Durbin said in a letter to Albert Bogaard, Parkmobile’s chief executive. “Instead of honestly telling this story you decided to side with the credit card giants and refuse to tell your customers what really happened.”
In a separate letter to Washington Mayor Vincent Gray, the lawmaker said city contractors should not be taking sides about legislative policy and asked that the city distance itself from ParkMobile’s claims.
“[I]t is inappropriate for a contractor, using District resources, to offer up incorrect, unsolicited legislative analysis while hiding behind poorly reasoned excuses for their own price hikes,” Durbin said.
“What’s next? Emails to District residents from contractors opining on the Affordable Care Act? Press releases blaming higher school lunch prices on the Farm Bill?” he added.
Meanwhile, the Merchant Payments Coalition, a trade group for retailers and other businesses, circulated their own statement on Monday, charging that Visa (V), MasterCard (MA) and some large banks have been “falsely blaming” the amendment for their own fee hikes.
“Banks and credit card companies blame debit reform for everything from obesity to bad weather. The bottom line is they will find any way they can to raise fees on consumers and Main Street businesses no matter what Congress or anyone else does,” Doug Kantor, counsel for the group, said in a press release.
The merchants group also charged that after its first email to customers, Parkmobile later tried to change its explanation for the fee increase. The coalition quoted from an email it had obtained by Parkmobile to one of its customers.
“The card brands and large issuing banks weren't too happy about having their debit interchange fees capped. So, they responded by raising regulated debit interchange fees to the cap across the board without regard to transaction size,” the email said.
Asked about the note on Monday, Parkmobile spokesman Laurens K. Eckelboom described the email as “an attempt from one of our member services representatives to provide additional information to one of our members.”
He added that it was not an official statement from the company, and declined to comment further on the matter.