The vote removes the last hurdle in getting this bill enacted into law. President Obama has said that he will sign the legislation once it clears Congress. He is expected to sign it as early as Tuesday, added PMAA. The House of Representatives [image-nocss] passed the legislation on June 30.
Provisions within the package, known as the Durbin Amendment, direct the Federal Reserve to issue rules to ensure that debit-card interchange fees, also known as swipe fees, are reasonable and proportional to the processing costs incurred. Visa and MasterCard currently charge debit swipe fees of around 1% to 2% of the transaction amountamong the highest rates in the industrialized world.
Swipe fees have been the convenience and petroleum retailing industry's top "pain point" and second largest expense itembehind only labor costsfor a number of years, NACS said.
"Today's vote demonstrates the value of retailers engaging with their elected officials," said Hank Armour, president and CEO of the National Association of Convenience Stores. "Last year, we said that 2010 will be the year that we achieve meaningful interchange reform if we can combine the power of skillful lobbying with dramatic grassroots activity. Through consistent engagement with Congress, combined with massive consumer petition campaigns, we have clearly seen that great things are possible when our industry is engaged."
(Click here for previous CSP Daily News coverage of the convenience store industry's swipe fee battle.)
The vote to pass the financial reform package followed intense lobbying by the banking industry in opposition to the Durbin Amendment.
"From the phone calls and letters that flooded congressional offices in support of this legislation to the record-setting 5.4 million customer signatures that our industry collected demanding reform, we have made our voices heard and Congress has listened," added Armour.
"This victory shows what we can accomplish as an industry working together," said NACS Ccairman Jay Ricker, chairman of Anderson, Ind.-based Ricker Oil Co. "The power of grassroots advocacy is immense, and the possibilities are endless when we fight for what is right."
The legislation includes a provision directing the Federal Reserve to issue rules preventing card networks from requiring that their debit cards can only be used on one debit card networkensuring that retailers will have the choice of at least two networks upon which to run debit transactions. In addition, the amendment would allow merchants to choose to decline credit cards for small dollar purchases because swipe fees often exceed profits on such sales. The amendment also clarifies that retailers can offer discounts to consumers who choose to pay with cash, check or debit card.
"At its core, this legislation simply introduces competition to a market that has not had any," said NACS vice chairman of government relations Tom Robinson, president of Santa Clara, Calif.-based Robinson Oil Corp. "Both consumers and retailers will see benefits as debit card fees will be aligned more closely with the cost of checks, as opposed to credit cards."
Other provisions, in the futures market/derivatives title, include aggregate position limits on speculative oil traders, mandated clearing of over-the-counter (OTC) commodity derivatives, exemption of end-users like PMAA member companies from clearing and margin requirements if they are doing so for commercial purposes, and Commodity Futures Trading Commission (CFTC) authority to regulate swaps, OTC, energy-related and electronically-traded transactions by closing the so-called "Enron," "swaps" and "London" or "foreign-exchange" loopholes.
Financial institutions would have to separate their commodity derivatives trades into a separately capitalized entity walled off from federally insured deposits. This will essentially reduce the amount of leverage speculators take in trading West Texas Intermediate (WTI) crude oil, RBOB, and heating oil contracts, according to the Petroleum Marketers Association of America.
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