WASHINGTON -- New legislation to repeal debit-card interchange fee reforms is drawing sharp criticism from the convenience-store and retail industries.
Jeb Hensarling (R-Texas), chairman of the House Financial Services Committee, has released a discussion draft of the Financial CHOICE (Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs Act), the Republican plan to replace the Dodd-Frank Act, which he said has “failed.”
The Merchants Payments Coalition (MPC) said this legislation “favors the interests of fewer than 2% of the nation’s largest banks and the credit-card brands over the interests of small retailers, their employees and consumers in every Congressional district in the country.”
“Without debit reform’s competition-enhancing standards, banks would be free to return to the days of unfettered price fixing,” said Mallory Duncan, chairman of the MPC and senior vice president and general counsel at the National Retail Federation (NRF). “Despite the smokescreen the big banks put up, debit reform is an incontrovertible success and should be protected.”
This bill “would turn the clock back six years to when financial institutions operated this swipe fee business as a rigged market without competition,” said the MPC. “The reforms Rep. Hensarling proposes to repeal also brought competition into the debit-routing market, where previously there was none. Repealing these reforms removes requirements for networks to compete and paves the way for network monopolies, reducing our payment security while raising costs for all American consumers and retailers and harming our economy as a whole.”
Earlier this month, Rep. Randy Neugebauer (R-Texas), chairman of the Financial Institutions and Consumer Credit Subcommittee of the House Financial Services Committee, introduced H.R. 5465 to repeal what he calls the “misguided” debit swipe-fee reforms introduced by the Dodd-Frank Act.
“NACS is deeply disappointed that Rep. Neugebauer has introduced a proposal to repeal debit swipe fee reform. The proposal would allow credit-card Goliaths to resume price-fixing of debit-card fees and add new costs for consumers and small retailers,” said Lyle Beckwith, senior vice president of government relations for NACS.
“Even with reform of debit swipe fees, the credit-card price fixing by Visa and MasterCard means retailers and consumers in the United States pay the highest swipe fees in the world—up to seven or eight times European levels,” he said.” Without the vital protections and small measure of competition debit reform has introduced to the market, consumers would face higher prices and smaller merchants would face even greater burdens. We strongly urge Congress to put the interests of consumers, merchants and the economy as a whole ahead of the desire by the credit-card giants to resume fixing prices without limitation.”
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