Key Lawmaker Proposes Repeal of Durbin Amendment

Rep. Jeb Hensarling (R-Texas) Chairman of the House Committee on Financial Services, announced that he will introduce legislation in the coming weeks to overhaul significant parts of the Dodd-Frank financial regulations.
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Rep. Jeb Hensarling (R-Texas) Chairman of the House Committee on Financial Services, announced that he will introduce legislation in the coming weeks to overhaul significant parts of the Dodd-Frank financial regulations. Notably, Rep. Hensarling's plan would include, among other things, a repeal of the so-called "Durbin Amendment" imposing a cap on "swipe fees" on debit card transactions. The amendment, authored by Sen. Richard Durbin, (D-Ill.), charged the Federal Reserve with regulating fees on debit card transactions and, in 2011, the Federal Reserve capped fees at 21 cents per transaction.  

This legislation has no chance of passing this year, but it is part of a broader House Republican effort to showcase policy priorities before the November elections. Despite its long-odds at being enacted this year, proposals such as these often are referred to in subsequent years when Congress begins serious efforts to pass financial reform legislation. Therefore, NATSO and the entire merchant community takes the threat very seriously, and is actively working to ensure that lawmakers know that this is a controversial proposal that should not be considered either this year or in the future.

The “Durbin Amendment” brought a level of transparency (small businesses can see and know exactly how much they will be charged for a debit transaction) and a level of competition into a market where fees were traditionally set collectively behind closed doors and without regard to the costs imposed on consumers and retailers. 

This debit reform has benefited American consumers, merchants and the economy as a whole since it was enacted. The retail industry functions on razor thin profit margins, and our members compete for customers on price every day.  If a merchant can realize any savings in the system, it will use it to hold down prices, extend sales or increase value for its customers.  The savings from the debit reforms have been passed to customers due to intense completion in the retail marketplace and have permitted merchants to reinvest in their businesses, which as supported more jobs and boosted economic activity.    

In a letter to Chairman Hensarling and Ranking Member Maxine Waters (D-Calif.), the Merchants Payments Coalition (MPC), of which NATSO is a member, argues that Rep. Hensarling’s proposal will allow price-fixing on debit swipe fees and will return the fees to outrageous levels, given that credit card companies like Visa and MasterCard dominate the market to the extent that they can fix fees, squeezing retailers and raising costs for consumers.

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