Financial Choice Act passes House committee, leading to potential
repeal of debit swipe fee reforms.
BY ANNA READY
In 2010, the convenience and fuel retailing industry hailed one of its most significant legislative victories ince NACS was founded. And as we all know, credit and debit card swipe fees have skyrocketed to a multibillion dollar industry for the banks—and the second highest cost to convenience
retailers after labor.
Debit swipe fee relief came as an amendment
offered by U.S. Sen. Richard Durbin (D-IL),
which was enacted on July 21, 2010, as part of the
Dodd-Frank Wall Street Reform Act. The Durbin
Amendment, as it became known, required the
Federal Reserve Board to write regulations ensuring that debit card swipe fees that are centrally
set by the card networks for the largest banks
in the nation (those with more than $10 billion
in assets) are “reasonable and proportional” to
the banks’ cost of processing debit transactions,
which is mere pennies.
Ultimately, the Federal Reserve imposed a limit on
centrally fixed debit swipe fees. The Fed released draft
debit rules on December 16, 2010, that limited debit
card swipe fees to between 7 and 12 cents per transaction. But when the Fed released a final rule on June
29, 2011, it set the fees at 21 cents per transaction, plus
0.05% of the transaction’s value, and an additional one
cent per transaction to pay for fraud prevention.
Although U. S. merchants still pay six to 10 times
more for debit transactions than it costs banks to
handle the transactions, debit swipe fee reform has
resulted in savings to merchants and consumers alike.
In fact, debit swipe fee reform has saved consumers
nearly $6 billion per year and has supported more than
37,000 jobs annually.
Six years later, some members of Congress are
attempting to dismantle the Wall Street Reform Act.
On September 9, House Financial Services Committee
Chairman Jeb Hensarling (R-TX) introduced a bill, the
Financial Choice Act (H.R. 5983) that repeals much