WASHINGTON–The National Retail Federation today said Congress should reject a proposal from the chair of the House Financial Services Committee to repeal a cap on debit card swipe fees.
“Repealing this cap would double the fees that banks charge retailers and their customers when they use a debit card to pay for purchases,” NRF Senior Vice President and General Counsel Mallory Duncan said in a statement. “Doubling swipe fees and driving up prices paid by consumers seems like a strange platform to ask members of Congress to run on during an election year. A vote to repeal the Durbin Amendment is a vote for higher consumer prices and isn’t likely to win many votes in November.”
“Without Durbin’s competition-enhancing standards, banks would be free to return to the days of unfettered price fixing when they could charge monopoly like fees for a task that costs them pennies,” Duncan continued. “We can’t allow that to happen. Swipe fees are a hidden tax on goods and services purchased by consumers every day. Hidden taxes are bad for consumers and our nation’s economy.”
The National Retail Federation issued the statement following the release of a draft of legislation by Rep. Jeb Hensarling (R-TX) that seeks to repeal the Durbin Amendment cap on debit swipe fees as part of a broader rewrite of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
In a statement, the NRF said, “Prior to passage of the Durbin Amendment as part of Dodd-Frank, banks charged retailers 1%-2% of the purchase amount to process debit card transactions. That amounted to about 45 cents on the typical debit purchases, but could come to several dollars on larger purchases.”
The NRF continued by saying “retailers have passed along the overwhelming majority of the $8.5 billion in annual savings from Durbin to consumers, according to a study conducted by noted economist Robert Shapiro. “At 22 cents, however, the cap is more than five times banks’ actual cost of processing debit transactions,” the NRF said. “The Fed has estimated banks’ actual cost of processing debit transactions at an average of only four cents.”
The retail group said a survey it recently conducted found that 89% of consumers responding said the cap should be left in place.