WASHINGTON -- On a 54 to 45 vote that failed to win the required 60 votes for passage, the U.S. Senate yesterday reject an amendment by Senators Jon Tester (D-Mont.) and Bob Corker (R-Tenn.) to require the Federal Reserve to delay implementation of the rules to lower and cap at 12 cents the debit-card interchange or "swipe" fees the card companies charge retailers.
Click herefor C-SPAN video of Tester's speech yesterday on the Senate floor on the debit-card usage fee amendment.
Andclick here to see how the senators voted.
The defeat was a huge victory for convenience/gasoline retailers; industry associations including the National Association of Convenience Stores (NACS), the Petroleum Marketers Association of America (PMAA) and the Society of Independent Gasoline Marketers of America (SIGMA), as well as state convenience and petroleum marketing groups and associations representing retailers in other channels, have been urging their members for some time to contact their elected officials to register their support of swipe-fee reform and opposition to any delay in implementation.
(Andclick here for previous CSP Daily News coverage of the interchange fee-reform effort.)Sen. Dick Durbin (D-Ill.), the primary sponsor of the current law, argued on behalf of retailers that the Fed should be permitted to continue its work and issue a final rule. He said that the Tester amendment does nothing more than kill the current law and would have required the law to be rewritten in effect to be a bailout for credit-card companies and big banks.
Tester's amendment would have required a six-month study of the effect of the Durbin amendment on small banks, followed by an additional six-month delay for the Fed to incorporate those effects in its rule.
"This vote is an enormous win for consumers, since it fundamentally changes the rules in how banks collect $1 billion every month in debit swipe fees from consumers," said Jeff Miller, who is president of Norfolk, Va.-based Miller Oil Co. "The vote means that consumers will now have a choice in how they pay for goods, and retailers will be able to provide incentives to reward customers for selecting lower-cost options, instead of funneling these costs directly to the banks. Today's vote clearly shows the importance of making your voice heard," continued Miller.
"This was a 10-year battle to kill the stranglehold that the banking industry has on how our country's payment system operates and we were fighting against an opponent that has poured hundreds of millions of dollars into maintaining the status quo. Our convenience and fuel retailing industry played a leading role in this historic victory with petition campaigns from a record-setting 5.4 million consumers demanding change, the tens of thousands of letters and calls from retailers to Congress and the hundreds of personal visits that our members made to congressional offices both on Capitol Hill and in hometown offices."
Defeat of the amendment clears the path for the Feds final rules on debit-card reform to become law on July 21. The reforms limit price-fixing by the nation's largest banks; they will now be required either to compete on their debit card swipe fees or charge an amount that is "reasonable and proportional" to their costs.
"While the banks continue to use fear tactics to mislead Americans about how this vote will affect them, the banking industry ironically is also a winner with today's vote," added Miller. "The Federal Reserve's proposed rules would still allow banks to make a reasonable, if not sizable, profit on debit transactions. A survey of banks by the Fed found that debit swipe costs averaged around 4 cents per transaction, and the final rules are expected to set rates at least 300 percent above that rate--a profit margin that is unimaginable in our industry, which saw overall pretax profits of 1.1% in 2010."
More than 50 small-business owners from across the country will hold a rally today near the U.S. Capitol building to thank Congress for protecting commonsense swipe-fee reform.
"On behalf of the business owners and consumers across the country that have suffered unfairly as a result of excessive swipe fees, I applaud Congress for standing up for the hard-working people on Main Street that will now see the benefits of commonsense reform," said Dennis Lane, national spokesperson for Reform Swipe Fees Now and 7-Eleven franchisee, who will be among the speakers at the rally. "These fees have been preventing guys like me from putting our hard-earned dollars back into our businesses and our communities for far too long. I couldn't be more pleased that Congress has voted once again in favor of the reasonable reform that will enable us to hire more employees, provide better benefits and pass savings on to customers."
Retailers say that they will pass savings from swipe-fee reform on to consumers. "There is no doubt in my mind that customers will see savings returned to their pockets once this rule is finalized," said Leslie G. Sarasin, president and CEO of the Food Marketing Institute (FMI).
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