House Republicans would repeal the cap on “swipe fees” on debit card transactions imposed by the 2010 Dodd-Frank financial law, the author of GOP financial reform legislation revealed Tuesday.
In doing so, Republicans would reverse the advantage given to retailers burdened by fees on card payments, and reopen a major lobbying fight between merchants and banks.
Rep. Jeb Hensarling, the Republican chairman of the House Financial Services Committee, said Tuesday in New York while unveiling his draft bill to provide a GOP alternative to Dodd-Frank that it would repeal the “price controls” on swipe fees contained in the so-called “Durbin amendment” to the 2010 law.
The amendment, authored by Sen. Richard Durbin, D-Ill., charged the Fed with regulating fees on debit card transactions. In 2011, the Fed capped fees at 21 cents per transaction.
Critics of the rule, including banks that issue the cards, have argued that the fee cap meant that financial institutions passed costs on to customers.
Meanwhile, proponents of the rule have said that the Fed set the cap too low to provide significant benefits to consumers.
Douglas Kantor, counsel to the Merchants Payments Coalition of retailers, criticized the inclusion of the Durbin amendment repeal provision. “The Hensarling proposal would promote more price-fixing and detract from the few market forces that were actually created on debit-card fees,” he said in a statement provided to the Examiner. The coalition has argued 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.
