ALEXANDRIA, Va. -- Seven years of calls, letters, meetings and entreaties from the retail industry are coming to a head as the Senate prepares to vote on an amendment that would put the brakes on new rules for limiting interchange fees on debit-card purchases.
The Senate majority leader, Harry Reid (D-Nev.), has announced plans to schedule a vote on an amendment by Senators Jon Tester (D-Mont.) and Bob Corker (R-Tenn.) after Congress returns from the Memorial Day recess on June 6. The amendment would delay for 15 months implementation of rules from the Federal Reserve to [image-nocss] limit the fees on debit-card transactions while a six-month study is conducted on the potential impact on bank profitability. The rules would then need to reflect the results of this study. (Click here for previous CSP Daily Newscoverage of the interchange fee-reform effort.)
An original version of the Tester and Corker's amendment called for a two-year delay, but was since rewritten to a six-month delay to win more votes in the Senate. As Lyle Beckwith sees it, this new version of the amendment is actually worse than the original because it dictates that the study be factored into the rule-making.
"Obviously they will get a report to rewrite rules in the banks' favor," Beckwith, NACS senior vice president of government relations, said yesterday during a conference call with the media.
In addition, the final form of the amendment is not clear, because Tester and Corker may still be tweaking it to gain even more votes, said Beckwith. While the vote has not yet been scheduled, he anticipates it taking place the week of June 6 or June 13. The speaker of the House, Representative John Boehner (R-Ohio), has said his chamber will not vote on it if the Senate does not "take action."
The burden is on Tester and Corker to clinch 60 votes so that the amendment can pass; however, "this issue is very difficult to get an accurate vote count on," said Beckwith. "There are just a lot of senators who don't want to vote on this and don't want to commit."
He added, "Having said that, we feel as though we're in a good position right now, based on the fact that they would need 60 votes to pass the Tester amendment, and it looks like it would not be impossible but certainly would be an uphill climb for them to do that. Nevertheless, there are a large number of senators who are in the neutral, uncommitted area--that means the vote could go either way."
Tester has argued that the debit-card interchange rule-making provision--part of the Durbin Amendment enacted with the 2010 financial reform bill--mandates a fixed price for a banking service and could harm small banks in Montana. An exemption meant to protect small financial institutions is "unworkable," he claims, a charge that Beckwith said is based on faulty talking points from the banking lobby.
If the vote on the Tester amendment is close, it might inspire the banking industry to push for a vote in the House. "If we do what we're supposed to--get well over 50 votes--it should kill the desire for it to come up in the house or senate again," said Beckwith. "We don't want to win; we want to win big."
Separate from the vote on the Tester amendment, the Federal Reserve has announced that the final debit-card interchange rules will be implemented by July 21. Since the timing and content of the final rules are still unknown, NACS is proceeding as if the vote on the Tester amendment is occurring without the final rules being put forth. "If between now and then, the final rule is put forth, depending on what it says, it will certainly change the dynamics of the issue and how [the Senate] will vote. It will certainly change the landscape," said Beckwith.
He added that the banking industry has amassed a massive lobbying effort on this issue, and this is the final true chance to impact the rules on debit-card fees. "From a legislative standpoint, they've got all their ducks in one basket," he said. "If we get a convincing vote on this, I don't think there is stomach in Congress to vote on it again."
Meanwhile, for retailers, losing the vote "is not an option," he said. But "if the Tester amendment passes, depending on whatever it is, we will have to reassess that. I'm going into battle right now and not planning for defeat. I'm planning how to win."
NACS is asking retailers and suppliers to reach out to their senators to encourage a "no" vote on the Tester amendment, either by calling their office directly, faxing them a letter or scheduling a meeting during the Memorial Day recess, which ends June 3. Or to send an automated e-mail, visit www.nacsonline.com/swipefeesletter.
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