ALEXANDRIA, VA – More than 170 amendments have been filed to the financial regulatory reform bill now before the Senate. In an attempt to expedite the process, Majority Leader Harry Reid (D-NV) asked senators to consolidate their amendments.
On Monday night, Senate Majority Whip Richard Durbin (D-IL) filed a new amendment (#3932), which merges the main provisions of two earlier amendments (#3769 and #3771). This new amendment will reform interchange fees on debit cards and address the rules and regulations associated with accepting debit and credit cards.
With respect to the debit card provisions, it’s important to point out that the language has an exemption for small banks/credit unions with under $1 billion in assets, meaning that 92 percent of all banks, 98 percent of all credit unions and 86 percent of all thrifts would be exempt, allowing them to continue to receive the same interchange fees they receive today.
NACS is fine with the small bank exemption in this amendment, as it was added to the amendment to satisfy senators concerned about their community bankers and small credit unions. More than 80 percent of cards are issued by the 10 largest banks, so the vast majority of transactions will be covered by this amendment.
“Once again, NACS is asking you to call both your senators today and ask for their support for Durbin amendment #3932. The grassroots we have brought upon the Senate over the past week has been overwhelming, and is bringing us closer to success,” said Lyle Beckwith, NACS senior vice president of government relations. “Sen. Durbin has been so energized by our efforts, that he is demanding the Senate vote on his new amendment.”
The Durbin amendment would direct the Federal Reserve to issue rules to ensure that debit interchange fees are reasonable and proportional to the processing costs incurred. Visa and MasterCard currently charge debit interchange fees of around 1 percent to 2 percent of the transaction amount. These fees are far higher than the actual cost of processing debit transactions, and they mean that small businesses and merchants always get shortchanged when they accept a debit card for a sale.
The Durbin amendment also prevents card networks like Visa and MasterCard from penalizing sellers for offering discounts to customers. The amendment would allow sellers to offer discounts for customers to use competing card networks and for customers to pay by cash, check or debit card. The amendment would allow sellers to choose to decline credit cards for small dollar purchases because interchange fees often exceed profits on such sales.
“Many senators would prefer there be no vote on this amendment. Do not let them avoid this vote by telling you they would have voted for it or the previous Durbin amendments if they had been called,” Beckwith added. “It is essential that your senators know you expect a favorable vote on this new amendment.”