Defeating 'Delay & Derail'

Republican, Democratic representatives come together for swipe-fee reform

WASHINGTON -- "They call for delay but they seek to derail."

U.S. Representative Peter Welch (D-Vt.) is talking about two measures introduced this week that would stall by as much as two years implementation of the Durbin debit-card swipe-fee amendment.

Lobbyists for the country's major banks, Visa and MasterCard are launching a multi-million dollar assault to jettison the amendment that rode the back of last year's landmark Wall Street financial reform package. With the Federal Reserve scheduled this month to approve rules to go into effect in late July that would [image-nocss] limit the largest financial institutions from collecting more than 12 cents per transaction, critics have been buoyed by two bills introduced in recent days.

One, introduced Tuesday by U.S. Sen. Jon Tester (D-Mont.), would delay implementation of the Durbin amendment by two years, which by many accounts would kill the amendment (click here for previous CSP Daily News coverage). Another bill introduced Wednesday by Rep. Shelly Moore Captio (R-W.Va.)would postpone action for a year, during which the amendment's impact would be studied.

Welch, in an in-person interview with CSP Daily News and other trade media, decried further delays and said immediate implementation of swipe-fee reform is crucial for small-business operators, including the thousands of mom-and-pop convenience stores.

"Lack of regulation can make a profitable industry," Welch said of the duopoly maintained by Visa and MasterCard. "The price they are charging has not been subject to the law of competition."

In contrast, he said, c-store operators are governed by the "ruthless" law of free-market competition.

In interviews set up by NACS, CSP Daily News and other trade media met individually on Wednesday with four Congressmen, two from each political party, representing the cross section within both Democratic and Republican parties. Welch, who has emerged in recent years as a close ally of the National Association of Convenience Stores, is working closely with fellow Rep. Bill Shuster (R-Pa.), having cosponsored the Welch-Shuster HR 2382, the Credit Card Interchange Fees Act.

Now, the two are aligned to ensure that what was approved in a stunning victory for small merchants becomes national policy on July 21.

"I don't think there's any reason to delay [implementation]," Shuster said in an interview Wednesday. Shuster dismissed arguments that swipe-fee reform will hurt credit unions and smaller banks, which are protection by a provision in the Durbin amendment that exempts institutions less than $10 billion. As well, he pointed to one of his constituents, Sheetz Inc., which shared how swipe fees stood as the company's second largest expense, just behind labor but ahead of utilities.

Indeed, both Shuster and Welch chided the major financial institutions for using smaller banks and credit unions as pawns to stall debit-card swipe-fee reform.

"The big banks are using the good reputation of small banks for their argument," Welch said, because the big banks' credibility with both the public and Congress, has been severely compromised by Wall Street's collapse and the country's financial crisis.

"This," said Welch, "is about the payment system being fair."

Watch for Part 2 of this report, which looks at NACS' legislative push to ensure the Durbin Amendment takes effect amid a headwind of powerful opposition.

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