"If we don't put a big push on here in the end, we could still lose this," said Lyle Beckwith, NACS vice president of government relations, during a Tuesday conference call. "And make no mistake: The banks, credit unions and credit-card companies have not given [image-nocss] up trying to kill this bill."
A couple recent developments have placed the situation in flux. A proponent of the so-called Financial Services Reform BillSenator Robert Byrd (D-W.V.)passed away on Tuesday. And Sen. Scott Brown (R-Mass.), who had voted in favor of an earlier version of the bill, has withdrawn his support because of objections to a recently added $19 billion bank-fee provision, which would have paid for the bill's regulatory framework. As of Tuesday afternoon, members of a House-Senate conference committee planned to reconvene to determine an alternative means of funding.
"That, combined with Sen. Byrd's passing, makes the vote count possibly not there," warned Beckwith, who says there is "no margin for error" in the House and Senate votes taking place later this week.
And although the Durbin Amendment still directs the Federal Trade Commission (FTC) to write rules ensuring that debit interchange fees are "reasonable and proportional" to the cost of processing transactions, and still exempts banks and credit unions with less than $10 billion in assets from these rules, a few key changes were made in committee to secure crucial votes.These, as explained by NACS legislative counsel Doug Kantor, include: New exemptions. Government program prepaid and debit cards would be exempt from swipe-fee rules, as would be other prepaid cards. New discount guidelines. An earlier provision in the Senate version that would have allowed merchants to offer discounts based on credit-card network was replaced with a provision that prevents VISA and MasterCard from limiting the number of networks upon which a debit transaction can be processed. Meanwhile, although merchants can still offer consumers a discount based on form of paymente.g., debit, cash, checknew language states that they cannot offer discounts particular to a credit-card network or the bank issuing the card. New minimum and maximum guidelines. A provision allowing merchants to set minimum amounts for credit transactions was modified to transactions of $10 or less. At the same time, a provision that enables merchants to set maximum credit transactions was restricted to government entities or universities. Interchange wiggle room. Individual banks can ask for special dispensation to change their interchange rates to reflect spending on fraud prevention, although they would need to prove that they were effectively preventing fraud, spending the money efficiently, and would have to comply with rules on fraud prevention. Beckwith seemed confident that the bill's supporters would be able to bring Brown back on board, but he warned of a "number of votes in play." With this in mind, he urged retailers to call their local Senate and House representatives in support of the financial reform bill and specifically the Durbin Amendment.
"There is a great need for our industry, for more than just to vote, but also to show we're going to stand up for thisa great need for our industry to weigh in on final passage of the bill," he said, noting that some of the bill's Congressional supporters believe the Durbin Amendment imperils its passage. "It is incumbent on us to make up for opposition put forward by credit unions to come forward and make the Durbin Amendment a net positive for the bill, rather than a negative. For this bill and future bills, and our industry's credibility, that is very important."One of the banks and credit union's arguments against swipe-fee reform is the contention that retailers will not pass on any fee reductions to consumers. CSP Daily News asked NACS how the association is countering that claim. Beckwith responded: "How dare they? They're not passing it on. If there's a cheaper form of payment out there, of course retailers want their customers to use it. And how are they going to get them to use it? They will incentivize them. That's just intuitive to me."
He said, "Where do the banks come off saying retailers won't pass the savings on to consumers; therefore, we should keepit all. I just don't understand their logic.... They suddenly pretend that all the laws of economics are suspended."
NACS spokesperson Jeff Lenard added, "You do see cost savings passed along in the form of cash discounts at the pump when feasible. The banks don't make it easy to do that, but it's clear that when you can...reduce costs, you reduce the price."
The banks who want people to oppose the bill over the bank-fee provision are also saying it "will be passed on to [bank] customers in all the prices they pay in bank services. It is shameless that they then turn around and say" retailers will pass along costs, said Beckwith. It's "a basic matter of Economics 101 that in a market, higher costs to business mean higher prices, and lower costs to business mean lower prices.... That's how it works."The National Association of Convenience Stores is the association for convenience and petroleum retailing representing more than 2,100 retail and 1,500 supplier member companies.
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