Many people think of the Dodd-Frank financial reform as creating the Consumer Financial Protection Bureau.
Yet there is another part of the law that directly affects consumers.
That is the amendment that brought a measure of competition to the market for processing debit-card transactions.
While it doesn't get as much attention as the rest of Dodd-Frank, it has already saved consumers billions of dollars; helped Main Street retailers expand and create more jobs; and boosted our entire economy at a crucial point.
Debit reform deals with the way banks process the transaction when you swipe their debit card to pay for something.
Visa and MasterCard so dominated the card market that they price-fixed outrageous "swipe fees" for their member banks to charge merchants on debit transactions.
Debit reform, for the first time, offered banks incentives to compete. It told the Federal Reserve to limit how much price-fixed fees could be for the largest mega-banks. But, if they choose, those banks can avoid the Fed's limits if they just set their own fees rather than using the fees price-fixed by Visa and MasterCard.
Unfortunately, none of the big banks have chosen to compete, but the incentive and the opportunity is there.
Debit reform also brought competition to this rigged market by preventing Visa and MasterCard from paying banks to block other credit-card companies from processing debit-card purchases.
Reform ensures there are at least two competing networks to route debit transactions.
All of these changes are pro-competitive and pro-free market. And, even after reform, the mega-banks earn an average 500-percent profit margin on every debit transaction they handle, according to the Federal Reserve — a margin that is beyond what any merchant would dare to dream. Merchants average profit margins in the single digits.
Yet the banks and credit-card companies have complained about having to compete on debit for six years. The House Financial Services Committee is considering a bill, the Financial Choice Act, that would do the opposite of its title. The bill would repeal debit reform, end debit network competition and end incentives for banks to compete on price.
Markup of the bill in committee is today.
In short, it's the Financial NO-Choice Act. The plain fact is that competition is good for businesses and their customers. It's the fundamental principal of our system of free markets.
Without it, the banks have managed to charge U.S. merchants the highest swipe fees in the industrialized world.
Those fees raise prices for almost everything consumers buy, from aspirin to airline tickets, even if they don't use cards. According to a prominent economist, Americans saved nearly $6 billion in the first year of debit reform alone and those huge savings supported 37,000 jobs.
Price-fixed fees drag down Main Street retailers and that hurts the broader economy.
Free markets made our economy great: Why in the world would we want to repeal a reform that finally brought free market incentives and principles to a hidden corner of the economy that had operated without it?
The NO-Choice Act would approve price-fixing by Visa and MasterCard. That is wrong, it is anti-free market, and the bill needs to be stopped.
Greg Ferrara is senior vice president of Government Relations & Public Affairs at the National Grocers Association. Thinking of submitting an op-ed to the Washington Examiner? Be sure to read our guidelines on submissions.