As the House-Senate conference committee prepares to tackle the debit-interchange amendment next week in the financial reform-bill, the U.S. payments industry hopes the bipartisan nature of a group of House lawmakers opposing the amendment will play in their favor.
A June 16 letter sent to conference members and signed by 131 members of the House outlined their “grave concerns” about the amendment. Among them were 71 Democrats and 60 Republicans, comprising nearly one-third of the House. The amendment was not part of the House’s version of the reform bill.
The letter, written by Debbie Wasserman Schultz, D-Fla., contends the amendment, which would enable the Federal Reserve Board to set debit card interchange rates based on the issuing costs to large banks and would let merchants set minimum purchase amounts for debit card purchases, would “devastate” credit unions and community banks.
The amendment exempts financial institutions with less than $10 billion in assets, but smaller banks have said they fear market forces will drive down the interchange revenues they need to continue to offer debit cards if the amendment becomes law.
The signing lawmakers also have “strong reservations about the lack of congressional review, debate or study” about the amendment’s provision, the letter notes. “The debit rate-setting provision has never been vetted by any committee in either chamber (of the House or the Senate).”
Interchange is an “incredibly complex issue” that affects the lives of consumers, and interjecting the Federal Reserve into the electronic-payments system potentially would cause serious disruptions “with no discernible benefits to consumers,” the letter states.
Wasserman leading the effort is “meaningful” because she has a lot of leadership and is widely respected by members of both parties within the House, says a spokesperson for the Electronic Payments Coalition, which represents the nation’s largest banks and payment networks.
But Rep. Peter Welch, D-Vt., this week countered a key point in the lawmakers’ letter. In a letter sent to House colleagues, Welch noted that Congress has considered the interchange issue for some five years, holding six hearings before various committees.
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