WASHINGTON – Retailers are fighting back against financial industry efforts to repeal a cap on debit interchange fees.
The cap on "swipe" fees, called the Durbin amendment, was included as part of the Dodd-Frank financial reform law and was intended to be a boon to consumers.
However, banks and credit unions have lamented the law and claim that rather than putting more money in consumer pockets, it has actually been a benefit to retailers.
But retailers sent a letter recently to Senate and House leadership asking them not revisit the measure, which pits two powerful lobbying groups against each other.
"Repealing or weakening the law will provide a windfall for fewer than two percent of the country's largest banks and remove any and all competition from the debit routing market," said the letter, which was signed by several national and state merchant associations. "The debit reforms contained in Dodd-Frank are unique in that they brought the first piece of competition and transparency into a market that was historically void of it."
The merchant associations also said that since the amendment only applies to financial institutions with more than $10 billion in assets "over 98% of U.S. banks are exempt from the limit." They claimed that banks are still making a triple-digit profit on debit card transactions.
In letters outlining their top priorities for the incoming Congress, the Credit Union National Association and the National Association of Federally-Insured Credit Unions included repeal of the Durbin amendment as one of their goals for 2017.
"In 2017, NAFCU will continue to push for repeal of the failed Durbin measure and to fight against any efforts to expand interchange price caps to credit cards," the credit union trade group said in a statement.
Banks and credit unions say the lost revenue hamstrings them.
"Restore market pricing on debit interchange fees so that consumers can once again enjoy more flexibility in the products and services that banks offer," Rob Nichols, the president of the American Bankers Association, said in a letter to lawmakers.