Speaking at the National Retail Federation’s annual Washington Leadership Conference this week, Senate Majority Whip Richard Durbin (D-IL) warned that the “battle on swipe fees is not over. We’ve got to stay vigilant. The reason (banks’ opposition) is not going to go away is a simple calculation — $1.3 billion a month is on the table,” as reported by NRF’s Washington Retail Insight. The Federal Reserve is scheduled to vote on final regulations next week.
Durbin spoke to hundreds of retailers on Tuesday, June 21, the same day the Federal Reserve announced it would meet on June 29 to consider final regulations to implement the swipe fee provisions in last year’s Wall Street reform law. Under the Durbin swipe fee amendment, the Federal Reserve has the authority to develop regulations to ensure that swipe fees imposed on debit card transactions are “reasonable and proportional” to the actual cost to process the transaction. (Read BTW’s previous article on swipe fee reform.)
The current swipe fee rate is one to two percent of each transaction, about 44 cents on the average retail purchase, but under the Durbin amendment there would be a flat rate of not more than 12 cents per transaction. Banks that set their own rates rather than following industry fee schedules would be free to charge any fee they believe the market would bear, and financial institutions with less than $10 billion in assets would be exempt, Washington Retail Insight noted.