WASHINGTON — Some Congressional lawmakers suggested Thursday that the Federal Reserve delay implementation of rules that could cap the fees retailers pay for accepting debit cards, according to reports.
The Fed has proposed a 12-cents-per-transaction cap as one method of regulating debit-card interchange fees, a solution that banks and debit-card issuers strongly oppose. In arguments before the House Financial Services Committee's financial institutions subcommittee, bank representatives argued the change could cost banks billions of dollars and drive small banking firms out of business. They also said the 12-cent cap does not take into consideration the costs of fraud protection. The fees currently average about 44 cents per transaction, reports said.
Retailers have been pushing for federal regulation of the interchange fees for years, saying the banks and card issuers unfairly inflate the fees to fund rewards programs for cardholders.
"It isn't surprising that they are fighting Congressional and Department of Justice efforts to reform a broken system as each day of delay generates an additional $125 million of profit out of the pockets of Main Street businesses and consumers," said Peter J. Larkin, president and chief executive officer, National Grocers Association. "NGA strongly urges Congress to allow the Federal Reserve to continue their rule making process without delay."
"Despite the fact that the cost of processing these transactions has decreased, swipe fees have tripled in the past decade for small businesses," said Leslie G. Sarasin, president and chief executive officer, Food Marketing Institute. "Visa, MasterCard and the world's biggest banks are spending billions of dollars to protect their unfair and highly lucrative status quo."
The Fed is required by last year's massive financial reform overhaul to issue final standards for debit-card interchange by April 21. The new rules would take effect in July