Friday, May 14, 2010
Senate passes interchange amendment
In a development that may lead to dramatic change in the payments industry, the so-called Durbin amendment to the financial services reform bill passed the U.S. Senate by a 64 to 33 vote. The amendment would mandate the Federal Reserve Board to regulate interchange.
In a statement following the vote on May 13, 2010, Sen. Dick Durbin, D-Ill., said, "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."
But MasterCard Worldwide believes otherwise, arguing that the amendment "will reduce competition and hurt consumers" because big retailers will not pass onto consumers the savings from lower interchange fees.
Merchant advocacy groups, such as The National Retail Federation, the Merchants Payments Coalition and the National Association of Convenience Stores, support the amendment.
According to Hank Armour, President and Chief Executive Officer at the NACS, the Durbin amendment "would give equality for check card and paper check fees – meaning that debit interchange, or 'swipe,' fees could be significantly reduced or eliminated."
The Electronic Transactions Association, the payments industry's leading trade group, is opposed to the amendment. In a statement, ETA CEO Carla Balakgie said the amendment will "likely reduce credit availability for merchants and consumers, and raise the price of existing credit."
A similar financial reform bill is working its way through the U.S. House of Representatives. But the House bill reportedly does not contain the same interchange language as the Senate bill.
The ETA urges all payments professionals to make their opinions known by contacting their senators. Phone numbers and website addresses can be found at www.senate.gov/general/contact_information/senators_cfm.cfm .
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