A coalition representing consumers this week is urging lawmakers to oppose legislation that would put the brakes on proposed debit-interchange rate reductions, while a group of 7-Eleven Inc. franchisees similarly is vowing to keep lobbying Congress to oppose such a delay.
The Federal Reserve Board in December proposed capping debit interchange at 12 cents per transaction, and on March 29 board Chairman Ben Bernanke said the agency would not meet its April 21 deadline to issue its final rules while it studies more than 11,000 public comments on the subject (
Sen. Jon Tester, D-Mont., on March 15 introduced a bill that would delay implementation of the new rates for up to two years while regulators study the cost of the rule (
Tester on March 20 attached the bill as an amendment to the Small Business Investment and Research Act. Although Tester this week is making cable-TV appearances and knocking on colleagues’ doors seeking support for the measure, observers believe Tester faces an uphill fight to round up the 60 votes needed to support the measure.
Americans for Financial Reform, a broad coalition formed in April 2009 that includes the Consumer Federation of America, the U.S. Public Interest Research Group and other consumer organizations, on March 30 sent a letter to lawmakers urging them to oppose efforts to delay the so-called Durbin amendment within the Dodd-Frank Act under which the Fed was directed to come up with a “reasonable and proportional” debit-interchange rate scheme.
“Feeble competition in the payment card marketplace has led to unjustifiably high debit-interchange fees that the poorest Americans, generally cash customers, are required to subsidize at the store and at the pump,” the letter notes.
In its attempt to halt new debit-interchange rules, the banking industry is suggesting that consumers would be harmed if the debit-interchange rate is capped at 12 cents per transaction, Ed Mierzwinski, program director at U.S. Public Interest Research Group, tells PaymentsSource.
“Banks are spending millions of dollars, as far as I know, to kill the Durbin amendment, and in this process they are trying to confuse lawmakers about the effect of debit interchange on consumers,” he says.
The banking industry is warning that lower debit-interchange fees will drive up banking costs to consumers, when in fact “it is consumers who are being harmed every day at the point of sale by high debit-interchange fees,” Mierzwinski contends. “Among other things, the banks are misrepresenting consumers’ interests in their efforts to delay the rules’ implementation.”
7-Eleven franchisees from Maryland and Virginia who say debit interchange unfairly cuts into their thin profit margins also are visiting lawmakers this week, the Dallas-based convenience-store chain said in a March 30 press release.
“Over the next three months, dozens of 7-Eleven franchisees from across the nation will fly to Washington, D.C., to meet with their members of Congress and ask them to keep their promises (to reform debit-interchange policies),” the press release states.
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