WASHINGTON--(BUSINESS WIRE)--The National Retail Federation welcomed Federal Reserve Chairman Ben Bernanke’s remarks before the Senate Banking Committee today on regulations aimed at lowering the “swipe” fees banks charge retailers and consumers to process debit card transactions by more than $1 billion a month.
Bernanke was asked about swipe fee reform during a hearing this morning on implementation of last year’s Wall Street reform bill, which included a provision requiring that debit card swipe fees be “reasonable” and “proportional” to banks’ costs in processing the transactions.“Chairman Bernanke has made it clear not once but twice now that there is no need to delay swipe fee reform and the savings it will bring to American consumers this summer,” NRF Senior Vice President and General Counsel Mallory Duncan said. “The big banks claim they want a study, but the truth is that they want to kill reform. The Federal Reserve and the merchant community are committed to carrying out Congress’ intent to bring these fees under control. Big banks should not be allowed to take these savings away from retailers and their customers.”“We have plenty of information,” Bernanke responded when asked about further study of the issue. “That is not a problem.”
At the same hearing, Federal Deposit Insurance Corporation Chairwoman Sheila Bair downplayed banks’ claims that small and medium-sized banks would be harmed even though institutions under $10 billion in assets are exempt and retailers have pledged to continue to accept cards from all banks.
“Initial analysis is that there shouldn’t be an impact on safety and soundness,” Bair said.
Regulations that would reduce swipe fees by about 70 percent are scheduled to take effect July 21, but the banking industry is pushing for passage of a bill sponsored by Senator Jon Tester, D-Mont., that would delay reform by two years and require a study. Tester introduced the bill even though Congress held seven hearings and ordered two Government Accountability Office reports before enacting last year’s law.
Today is the second time in six weeks that Bernanke has pushed back against calls for delay. On March 29, he said the Fed would not have final regulations in place by its original April 21 goal because of the large volume of comments received on both sides of the issue, but would make the rules final in time to be implemented in July as scheduled.
Regulations proposed by the Fed in December would lower debit card swipe fees from their current level of 1 to 2 percent of each transaction to a flat fee of no more than 12 cents per transaction for large banks that adhere to fee schedules set by the card companies. Banks that set their own rates would be free to charge any fee they believe the market would bear provide that they do so independently. The move would reduce the current $20 billion a year in debit swipe fees by an estimated $1.2 billion a month.
Merchants are making a wide variety of plans to pass the savings along to customers who use debit cards, ranging from discounted prices to benefits and increased services such as free delivery at an appliance store, but would be unable to do so if reform is delayed.
As the world's largest retail trade association and the voice of retail worldwide, NRF's global membership includes retailers of all sizes, formats and channels of distribution as well as chain restaurants and industry partners from the United States and more than 45 countries abroad. In the United States, NRF represents the breadth and diversity of an industry with more than 1.6 million American companies that employ nearly 25 million workers and generated 2010 sales of $2.4 trillion. www.nrf.com
