U.S. Sen. Richard Durbin, D-Ill., on June 21 announced adjustments to the debit-interchange amendment he hopes will smooth its passage as members of the House-Senate conference committee convene tomorrow to discuss its inclusion in the joint financial-reform bill.
The tweaks consist of “minor, clarifying changes” to the original amendment, Durbin said in a statement.
The changes include a carve out for state governments that issue electronic benefits via debit cards that he promised last week (
“We’ve exempted states from interchange regulations and have included protections to ensure those who can least afford it are protected from unnecessary fees,” Durbin said.
Federal, state and local government-administered benefits delivered via prepaid cards will be unaffected by the amendment, provided that after a two-year grace period the prepaid cardholding beneficiaries are not charged any overdraft fees or fees for the first monthly in-network ATM withdrawal, Durbin said.
Another of Durbin’s changes is designed to assuage fears that if the Federal Reserve Board brings interchange rates down to “reasonable and proportional” levels in accordance with the amendment, consumers and banks would be forced to absorb higher card-network fees and to offset payment players’ other losses caused by lower interchange rates. Durbin’s adjusted amendment says that the Fed cannot regulate the fees card networks charge banks “except to ensure that the fees are not used to circumvent interchange-fee regulation.”
The amendment also includes a new clause ensuring that merchants may choose the debit network with the lowest cost for processing payments. It also clarifies that merchants may offer discounts for one form of payment versus another, but that such discounts cannot discriminate between card issuers or card networks.
Durbin in the adjusted amendment also set a floor of $10 for the minimum amount merchants may require for credit card payments.
The adjustments will be offered by the House to the Senate during conference negotiations beginning June 22. “It is expected to be debated and eventually accepted by the conference committee,” Durbin said.
