Retailers Winning Interchange Fee Fight
If there is anyone working in retail today who doesn’t want
to strictly limit what banks and card companies can charge for interchange
fees, then they must be the only ones we haven’t heard from on the issue. Over
and over again we’ve heard that the fees represent a hardship for merchants
and, ultimately, consumers because they cause the cost of goods to go
Senator Dick Durbin offered an amendment to the financial reform legislation
in Congress that is widely supported by the retail industry. Upon passage of
the measure in the Senate last month, Sen. Durbin wrote, "Passage of this
measure gives small businesses and their customers a real chance in the fight
against the outrageously high ‘swipe fees’ charged by Visa and MasterCard.
It will prevent the giant credit card companies from using anti-competitive
practices, allow merchants to offer discounts to their customers and restore
common sense and fairness to this broken system."
The banking and card
folks counter that the fees are legitimate and that eliminating them would
mean that consumers would have to pay annual fees or incur some other type
of charge to make up the difference. In essence, the amount consumers pay will
not change, but where they take the hit will.
In a letter to Sen. Durbin, MasterCard
CEO Robert Selander wrote, "The
decrease in merchant acceptance fees which would result from your amendment
would simply be borne by consumers — and at a time when consumers are struggling
from the steep recession and trying to regain some degree of spending power."
Discussion Question: What will the net effect of interchange fees dropping
be for retailers and consumers?
[Editor’s Note] A report by the Treasury Department estimates that the federal
government can save $39 million a year by negotiating lower fees on card transactions.
- Durbin Statement on His Debit Card Swipe Fee Amendment – United States
Senator Dick Durbin
- How retailers defeated the banks over debit-card swipe fees in Senate bill
– The Associated Press/The Seattle Times
- Durbin Sees $39 Million in Savings on Card Fees, Plans Hearing – Bloomberg