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Food industry groups expressed satisfaction at the news that the House and Senate conferees working on financial reform regulation have reached a compromise on the regulation of interchange swipe fees.
Under the sponsorship and guidance of Senate majority whip Richard Durbin (D-Ill.), the amendment to H.R. 4173, as modified by the conference committee, requires the Federal Reserve to issue regulations to establish that debit interchange fees “shall be reasonable and proportional to the cost incurred by the issuer with respect to the transaction.” Final regulations are to be issued no later than nine months after the enactment of the bill, which is known as the Consumer Financial Protection Act of 2010.
The amendment additionally permits merchants to offer discounts or in-kind incentives for customers to pay by cash, checks, debit cards or credit cards, provided that discounts for debit cards or credit cards don’t differentiate on the basis of the issuer or card network. Retailers are allowed to set a minimum dollar value for purchases with credit cards, not exceeding $10.
“FMI and our members have had interchange fee reform at the top of our list of priority issues for the past decade,” noted Leslie G. Sarasin, president and CEO of Arlington, Va.-based Food Marketing Group (FMI) a founding member of the Merchants Payments Coalition (MPC), a group of almost 100 associations representing retailers, supermarkets, drug stores, convenience stores, fuel stations, online merchants and other businesses that accept debit and credit cards, which advocates for a more competitive and transparent card system. “These fees represent the fastest-growing expense of our retail members and the only one over which we have zero control. This compromise is a good deal for consumers and is a strong step forward for competition.”
In support of the compromise amendment, FMI urged the need for equitable credit and debit card swipe fees in a morning drive-time radio advertising campaign in the Washington area in mid-June.
“This is a significant victory that comes after five long years of grocers and merchants educating members of Congress on the anti-competitive practices of the credit card companies and their largest banks,” said Thomas K. Zaucha, president and CEO of the Arlington-based National Grocers Association (N.G.A.). “Giving the Federal Reserve the regulatory authority to assure debit interchange fees are reasonable and proportional to the cost incurred by the issuer, represents an important first step to leveling the playing field for consumers and merchants. This achievement is a testament to the value of grassroots action by N.G.A. members in their strong outreach to members of Congress on this critical issue. N.G.A. and its members will now urge the House and Senate to pass the conference report next week.”
“The congressional action also serves to reinforce the class action litigation that N.G.A. brought on behalf of the grocery industry, and the merchant community, against the anti-competitive practices by the credit card companies and the banks,” added N.G.A. EVP and general counsel Thomas Wenning.
“The swipe fee reform compromise is a major step in the right direction for those who accept credit and debit cards,” weighed in Sandy Kennedy, president of the Retail Industry Leaders Association, also based in Arlington. “Consumers and retailers, small and large, will finally see some relief after years of skyrocketing fee increases imposed by big banks and credit card companies.”
Added Kennedy, “The approved language includes concessions from both sides but preserves the core elements of the Durbin amendment that address the excessive fees and anti-competitive practices of the big banks and card companies.”
According to FMI, U.S. consumers have been paying more than $50 billion annually in hidden interchange fees to credit card companies and banks.