WASHINGTON–Two Senate committees have announced hearings next week on the same day that will be of strong interest to credit unions, other financial institutions, retailers, consumers groups and more.
On May 4 the Senate Banking Committee will hold a hearing titled “Examining Overdraft Fees and Their Effects on Working Families.” The issue has drawn particular attention in recent months, with most major banks—and a number of credit unions—announcing elimination of or reductions in their overdraft fees.
Appearing as witnesses before the committee will be Aaron Klein, senior fellow in Economic Studies, Brookings Institution; Jason Wilk, founder and CEO of the fintech Dave, David Pommerehn, SVP/general counsel with the Consumer Bankers Association.
Hearing on Swipe Fees
Also on May 4 the Senate Committee on the Judiciary has scheduled a hearing titled, “Excessive Swipe Fees and Barriers to Competition in the Credit and Debit Card Systems.”
The committee is chaired by Sen. Richard Durbin (D-IL), for whom the long-debated Durbin amendment is named. Technically known as Regulation II, it requires the Federal Reserve to limit fees charged to retailers for debit card processing. It was passed as part of a last-minute addition to the Dodd-Frank Act financial reform legislation in 2010. After the rule to limit fees went into effect, a coalition of merchants sued the Federal Reserve, but the rule was upheld when the Supreme Court denied petition for certiorari in 2014.
The committee has not yet listed the witnesses who will appear.
In response to the announcement of the hearing, the National Retail Federation said the hearing “will give Congress an opportunity to closely examine anticompetitive practices that are adding to inflation through billions of dollars in ‘swipe’ fees charged to process credit card transactions.
‘Constantly Rising Fees’
“This hearing will focus a spotlight on constantly rising fees and unfair practices that show clear disregard for small businesses and American families,” said NRF Vice President for Government Relations, Banking and Financial Services Leon Buck. “Visa and Mastercard have price-fixed swipe fees for years and have repeatedly moved to block any innovation or fair play that threatens their hold on the payments market. Their fees have more than doubled in the past decade. and just last week they pushed through another billion-dollar increase that will make inflation even worse. Lack of competition is why swipe fees keep skyrocketing, and it’s good to see Congress demanding answers that will lay the groundwork for a solution.”
The retailers said the hearing comes after Visa and Mastercard pushed through a $1.2 billion increase in swipe fees on April 22.
As CUToday.info reported, the fee hike came despite a letter sent earlier this month by Durbin, Sen. Roger Marshall (R-KS), Rep. Beth Van Duyne (R-TX) and Rep. Peter Welch (D-VT) asking Visa and Mastercard to withdraw the increase. The letter said the card networks are “simply taking advantage of vulnerable Americans” and that raising fees “will undoubtedly increase the already high costs consumers are facing and add to inflationary pressure.”
Swipe fees average 2.22% of the transaction amount for Visa and Mastercard credit cards and are most merchants’ highest operating cost after labor, according to the NRF.