Durbin, Debit and Financial Reform

PYMNTS.comWHAT'S NEXT IN PAYMENTS  Friday 06.11.10

FEATURED STORY Durbin, Debit, and Financial ReformThe Durbin Amendment is emblematic of the abject failure of Congress and the President to do the right thing. It would require the Federal Reserve Board to regulate the setting of debit card interchange fees so that they are "reasonable and proportional to processing costs". Read More

Visa's Statement on the Approval of the Durbin Amendment

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According to Glenbrook's Payments News, Visa has released the following statement on yesterday's approval of the Durbin Amendment:

We are disappointed that Senator Durbin has decided to force unrelated legislation into the financial reform package at the eleventh hour without a hearing or debate.

“Thursday’s vote is another step in a lengthy legislative process. We’re hopeful that when the issue is fully reviewed by members of Congress during the next phase of negotiations, they will conclude the amendment harms consumers, credit unions and community banks and should be eliminated from the bill.

“Visa will continue to work with policymakers to educate them about this flawed legislation that imposes price controls on debit products and allows retailers to dictate which payment card is used by consumers at the point of sale.

“Debit products deliver significant incremental value over cash and check, including guaranteed payment to merchants, greater security and increased sales, all of which the Durbin amendment ignores.

“At the direction of Congress, the U.S. Government Accountability Office (GAO) has twice examined the potential impact of proposed interchange legislation, and confirmed that there is little evidence to suggest that consumers would benefit. In Australia, where price controls have been implemented, consumers have not seen a reduction in retail prices, and instead have experienced reduced consumer benefits and increased costs.

“We hope Congress sees today’s amendment for what it is – an attempt by retailers to increase their profits at the expense of consumers.”

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• Senate Approves Debit-Card Swipe-Fee Limits in Bill (Update1) (businessweek.com)


• Interchange Fees: New Senate Card Rules Could Make Shoping Cheaper (huffingtonpost.com)


• 134 National and State Associations Endorse Swipe Fee Reform Amendment (pindebit.blogspot.com)


• Swipe This Card; Shopping Could Be Cheaper (abcnews.go.com)


• Durbin, Number Two Senate Democrat, Backs Breaking Up Banks (huffingtonpost.com)


• Senate Amends Financial Overhaul Bill (nytimes.com)


• Senate Approves Debit-Card Swipe-Fee Limits in Financial Bill (businessweek.com)

Visa's Statement on the Approval of the Durbin Amendment

Image via Wikipedia

According to Glenbrook's Payments News, Visa has released the following statement on yesterday's approval of the Durbin Amendment:

We are disappointed that Senator Durbin has decided to force unrelated legislation into the financial reform package at the eleventh hour without a hearing or debate.

“Thursday’s vote is another step in a lengthy legislative process. We’re hopeful that when the issue is fully reviewed by members of Congress during the next phase of negotiations, they will conclude the amendment harms consumers, credit unions and community banks and should be eliminated from the bill.

“Visa will continue to work with policymakers to educate them about this flawed legislation that imposes price controls on debit products and allows retailers to dictate which payment card is used by consumers at the point of sale.

“Debit products deliver significant incremental value over cash and check, including guaranteed payment to merchants, greater security and increased sales, all of which the Durbin amendment ignores.

“At the direction of Congress, the U.S. Government Accountability Office (GAO) has twice examined the potential impact of proposed interchange legislation, and confirmed that there is little evidence to suggest that consumers would benefit. In Australia, where price controls have been implemented, consumers have not seen a reduction in retail prices, and instead have experienced reduced consumer benefits and increased costs.

“We hope Congress sees today’s amendment for what it is – an attempt by retailers to increase their profits at the expense of consumers.”

Related articles by Zemanta

• Senate Approves Debit-Card Swipe-Fee Limits in Bill (Update1) (businessweek.com)


• Interchange Fees: New Senate Card Rules Could Make Shoping Cheaper (huffingtonpost.com)


• 134 National and State Associations Endorse Swipe Fee Reform Amendment (pindebit.blogspot.com)


• Swipe This Card; Shopping Could Be Cheaper (abcnews.go.com)


• Durbin, Number Two Senate Democrat, Backs Breaking Up Banks (huffingtonpost.com)


• Senate Amends Financial Overhaul Bill (nytimes.com)


• Senate Approves Debit-Card Swipe-Fee Limits in Financial Bill (businessweek.com)

NACS Interactive Cartoon Depicts Cost of Interchange

Click to Enlarge

NACS Interactive Cartoon Depicts Cost of Credit Fees



The National Association of Convenience Stores has released an interactive cartoon designed to educate consumers about the problem of credit and debit card swipe fees with the hope of involving them in a solution. Called interchange fees by the banks that set the rates, swipe fees are a percentage of each transaction that Visa and MasterCard and their member banks collect from retailers every time a credit or debit card is used. Fees average about 2 percent in the United States.



The cartoon provides information about these hidden credit card fees, informing consumers that $2 out of every $100 spent for products at convenience stores goes toward interchange fees. Users can then see the effect that swipes fees have on specific purchases, whether for fuel, milk, bread, snacks or the daily newspaper. When consumers select a product, the cartoon displays how much profit the retailer makes on the purchase and how much money goes to credit card companies in the form of interchange fees.



With the purchase of a 50-cent newspaper, for example, the retailer would lose 11 cents, while the interchange fee would be 13 cents, according to the cartoon. The interactive program helps illustrate the low, or even negative, margins that convenience retailers have on small purchases made with credit cards.



“The battle over credit and debit card swipe fees that has been raging on Capitol Hill for the past five years will be heating up again soon,” said Lyle Beckwith, NACS senior vice president of government relations. “The credit card industry makes $125 million a day on swipe fees, so it is obvious why they want to protect their ‘secret tax’ on consumers and retailers. This cartoon is an interactive tool that can help bring together retailers and consumers to tell Congress why swipe fee reform is so essential to Main Street retailers, as well as American consumers.”



In 2008, Americans paid more than $48 billion in credit card swipe fees, according to NACS.



The interactive cartoon is viewable here.

NACS Interactive Cartoon Depicts Cost of Interchange

Click to Enlarge

NACS Interactive Cartoon Depicts Cost of Credit Fees



The National Association of Convenience Stores has released an interactive cartoon designed to educate consumers about the problem of credit and debit card swipe fees with the hope of involving them in a solution. Called interchange fees by the banks that set the rates, swipe fees are a percentage of each transaction that Visa and MasterCard and their member banks collect from retailers every time a credit or debit card is used. Fees average about 2 percent in the United States.



The cartoon provides information about these hidden credit card fees, informing consumers that $2 out of every $100 spent for products at convenience stores goes toward interchange fees. Users can then see the effect that swipes fees have on specific purchases, whether for fuel, milk, bread, snacks or the daily newspaper. When consumers select a product, the cartoon displays how much profit the retailer makes on the purchase and how much money goes to credit card companies in the form of interchange fees.



With the purchase of a 50-cent newspaper, for example, the retailer would lose 11 cents, while the interchange fee would be 13 cents, according to the cartoon. The interactive program helps illustrate the low, or even negative, margins that convenience retailers have on small purchases made with credit cards.



“The battle over credit and debit card swipe fees that has been raging on Capitol Hill for the past five years will be heating up again soon,” said Lyle Beckwith, NACS senior vice president of government relations. “The credit card industry makes $125 million a day on swipe fees, so it is obvious why they want to protect their ‘secret tax’ on consumers and retailers. This cartoon is an interactive tool that can help bring together retailers and consumers to tell Congress why swipe fee reform is so essential to Main Street retailers, as well as American consumers.”



In 2008, Americans paid more than $48 billion in credit card swipe fees, according to NACS.



The interactive cartoon is viewable here.