House Financial Services Committee Chairman Jeb Hensarling (R-Texas) will hold a hearing today to discuss the Financial Choice Act, which contains a provision to repeal the debit card swipe fee reforms implemented under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
NATSO, along with a coalition of more than 900 members of the retail community, has been actively opposing efforts to repeal what is commonly known as the Durbin Amendment and meeting with members of the Financial Services Committee to educate them that any removal of debit swipe fee reform would harm U.S. businesses and consumers.
The Financial Choice Act is expected to come to the floor for a vote in mid-May, coinciding with NATSO’s annual Day on the Hill May 15-17. NATSO members are urged to register to attend this important event so that the industry can collectively voice its strong opposition to the Financial Choice Act.
In an editorial that appeared April 24 in the Washington, D.C.,-based political newspaper The Hill, Rahim Budhwami, CEO at convenience store chain Encore Franchises, wrote that swipe fee reform brought modest competition to an unfair, fixed market. By limiting how high Visa and MasterCard can price-fix swipe fees, Congress gave banks incentives to compete, he said.
“If the banks simply set their own prices, they don’t have any limits on how much they can charge,” Budhwami wrote. “Reform is working. … If Congress repeals these reforms now, none of the banks will have any incentive to compete on price and the move toward a free market will stop in its tracks. That of course will mean higher prices for all of us.”
The Durbin Amendment imposed much-needed reforms on the debit interchange market and brought certainty for retailers and a level of transparency and competition into a market that was historically void of it.
During the five years that debit reform has been in effect, the producer price index, which represents what retailers pay for the goods they sell, has risen 9.4 percent. The consumer price index, by comparison, has risen just 4.3 percent. This means that retailers have absorbed more than 50 percent of the increase in their cost of goods. Debit reform has been one factor allowing them to do that.
Repeal of the Durbin Amendment would allow the big banks to impose outrageous fees on merchants and increase prices for consumers. Companies like Visa and MasterCard will dominate the market to the extent that they can fix fees, squeezing retailers and raising costs for consumers.
Subscribe to Updates
NATSO provides a breadth of information created to strengthen travel plazas’ ability to meet the needs of the travelling public in an age of disruption. This includes knowledge filled blog posts, articles and publications. If you would like to receive a digest of blog post and articles directly in your inbox, please provide your name, email and the frequency of the updates you want to receive the email digest.