2014

134 National and State Associations Endorse Swipe Fee Reform Amendment

Reforms will benefit consumers and merchants, small and large

ARLINGTON, Va., May 12 /PRNewswire-USNewswire/ -- In a letter addressed to all members of the U.S. Senate, 134 trade associations endorsed an amendment (S. Amdt. 3932) to the Restoring American Financial Stability Act of 2010 sponsored by Senate Majority Whip Richard Durbin (D-IL) that will address excessive debit card swipe fees and the anti-competitive practices of credit card companies and the big banks that issue their cards.  

The common-sense amendment would free merchants of anti-competitive restrictions imposed by the credit card companies, allowing merchants to offer discounts when customers use less expensive forms of payment.  The amendment would also direct the Federal Reserve to issue regulations to ensure that swipe fees imposed on debit card transactions are 'reasonable and proportional' to the cost incurred in processing the transaction.  

More than 80 percent of all interchange fees are collected by the 10 largest banks.  The amendment offered by Sen. Durbin exempts all banks, credit unions and thrifts with assets less than $1 billion, meaning that 92% of all banks, 98% of all credit unions, and 86% of all thrifts would be exempt, allowing them to continue to receive the same interchange fees they receive today.

According to the letter signed by 57 national associations and 77 state trade associations,

"Despite Congress' efforts to reign in abusive practices, credit card companies continue to take advantage of a major loophole in financial regulation.  In fact, they announced interchange rate increases just months after the passage of the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (Credit CARD Act), effectively circumventing many of the reforms instituted by Congress.  More recently, Visa Europe announced last month that it was voluntarily dropping debit card interchange fees to 0.2% in Europe, a decrease of 60%, while earlier in the month Visa increased rates on similar transactions in the United States by some 30%.  Quite literally, at a rate of approximately 2.0% on debit card interchange fees, which is 10 times higher in the United States, American businesses are subsidizing European transactions.

"Simple, common-sense reforms are needed to correct this market imbalance, which would give our organizations' members additional tools to manage our costs related to interchange fees.  First, the amendment would give the Federal Reserve the authority to conduct an open and fair rulemaking – without prescribing an outcome – in order to develop regulations to ensure that interchange fees imposed on debit card transactions be 'reasonable and proportional' to the cost incurred in processing the transaction.  Debit transactions are not an extension of credit and are directly drawn from a consumer's checking account, yet the interchange rate on debit transactions continues to increase.  Small banks, credit unions and thrifts with assets of under $1 billion would be carved-out from these rules, meaning that 92% of all banks, 98% of all credit unions, and 86% of all thrifts would be exempt, allowing them to continue to receive the same interchange fees they receive today.    

"Second, the amendment would prohibit anti-competitive restrictions on discounts and the setting of minimum transaction levels, providing entities with the freedom to choose their preferred method of payment.  Under current rules, any business, charity or government agency that accepts credit or debit cards is prohibited from setting a minimum transaction level, such as $3, even though the entity may actually lose money on the transaction because of slim profit margins.  Visa and MasterCard can and do impose fines on small businesses up to $5,000 per day for such offenses, which has the effect of ensuring that the card companies and big banks turn a profit even if the small business loses money on the transaction.  In addition, the amendment allows businesses to incentivize the use of one card network over another (e.g., a discount may be provided for Discover cards if they carry a lower interchange rate) and allows businesses to offer discounts on certain forms of payment (e.g., a discount may be offered for cash, check, PIN debit, etc., all of which carry lower rates than credit cards).  This amendment would not enable merchants to discriminate against debit cards issued by small banks and credit unions.  Visa and MasterCard require merchants to accept all cards within their networks, and this amendment does not change that requirement."

In the last year, small business owners have gathered nearly four million petition signatures from their customers and delivered them to Members of Congress, calling on them to reform these unfair fees.

In addition to the Retail Industry Leaders Association, organizations signing the letter included American Association of Motor Vehicle Administrators, American Dental Association, International Franchise Association, National Grocers Association, National Restaurant Association, Arkansas Hospitality Association, Louisiana Restaurant Association, Retail Council of New York State, and the Wyoming Lodging and Restaurant Association.

RILA is the trade association of the world's largest and most innovative retail companies. RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs and more than 100,000 stores, manufacturing facilities and distribution centers domestically and abroad.

Full letter text and list of organizations below:

May 12, 2010

TO THE MEMBERS OF THE UNITED STATES SENATE:

The undersigned organizations, representing a diverse array of interests including small business, state organizations, dentists, retailers, restaurants, grocery stores, convenience stores and others, write in strong support of S. Amdt. 3932, sponsored by Senator Richard Durbin, regarding interchange fee reforms to S. 3217, the Restoring American Financial Stability Act of 2010 now before the Senate.  Unless relief is granted, interchange "swipe fees," which amounted to $48 billion in 2008, will continue to rise as card companies and issuing banks seek even higher profits, primarily on the backs of our organizations' members.  This comes at a time when businesses, state agencies and charities – all of whom pay interchange fees – are struggling to help the economy grow again and when consumers can least afford pricing increases.

Despite Congress' efforts to reign in abusive practices, credit card companies continue to take advantage of a major loophole in financial regulation.  In fact, they announced interchange rate increases just months after the passage of the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (Credit CARD Act), effectively circumventing many of the reforms instituted by Congress.  More recently, Visa Europe announced last month that it was voluntarily dropping debit card interchange fees to 0.2% in Europe, a decrease of 60%, while earlier in the month Visa increased rates on similar transactions in the United States by some 30%.  Quite literally, at a rate of approximately 2.0% on debit card interchange fees, which is 10 times higher in the United States, American businesses are subsidizing European transactions.

Simple, common-sense reforms are needed to correct this market imbalance, which would give our organizations' members additional tools to manage our costs related to interchange fees.  First, the amendment would give the Federal Reserve the authority to conduct an open and fair rulemaking – without prescribing an outcome – in order to develop regulations to ensure that interchange fees imposed on debit card transactions be "reasonable and proportional" to the cost incurred in processing the transaction.  Debit transactions are not an extension of credit and are directly drawn from a consumer's checking account, yet the interchange rate on debit transactions continues to increase.  Small banks, credit unions and thrifts with assets of under $1 billion would be carved-out from these rules, meaning that 92% of all banks, 98% of all credit unions, and 86% of all thrifts would be exempt, allowing them to continue to receive the same interchange fees they receive today.    

Second, the amendment would prohibit anti-competitive restrictions on discounts and the setting of minimum transaction levels, providing entities with the freedom to choose their preferred method of payment.  Under current rules, any business, charity or government agency that accepts credit or debit cards is prohibited from setting a minimum transaction level, such as $3, even though the entity may actually lose money on the transaction because of slim profit margins.  Visa and MasterCard can and do impose fines on small businesses up to $5,000 per day for such offenses, which has the effect of ensuring that the card companies and big banks turn a profit even if the small business loses money on the transaction.  In addition, the amendment allows businesses to incentivize the use of one card network over another (e.g., a discount may be provided for Discover cards if they carry a lower interchange rate) and allows businesses to offer discounts on certain forms of payment (e.g., a discount may be offered for cash, check, PIN debit, etc., all of which carry lower rates than credit cards).  This amendment would not enable merchants to discriminate against debit cards issued by small banks and credit unions.  Visa and MasterCard require merchants to accept all cards within their networks, and this amendment does not change that requirement.    

By providing these and other important reforms, the Congress will send a strong message that it supports modernizing and updating our financial payments systems while providing relief to businesses owners who have seen their interchange credit card assessments skyrocket – for many businesses exceeding the cost of providing health care benefits to their employees.    

In closing, we are very concerned about the unintended consequences of not addressing interchange fees will have on our industries as the card companies and big banks continue to seek higher profits as a direct result of financial regulatory reform legislation, and other failing portfolios, through ever increasing interchange fees.  We ask that you support S. Amdt. 3932, sponsored by Senator Durbin, to the Restoring American Financial Stability Act of 2010 when it comes up for a vote in order to ensure that financial regulation reform is comprehensive and complete.  We look forward to working with you and your staff to incorporate these meaningful, common-sense reforms as part of the financial regulatory reform legislation.  

Sincerely,


National Trade Associations


American Apparel & Footwear Association

American Association of Motor Vehicle Administrators

American Beverage Licensees

American Booksellers Association

American Dental Association

American Home Furnishings Alliance

American Hotel & Lodging Association

American Nursery & Landscape Association

American Veterinary Medical Association

Automotive Aftermarket Industry Association

Consumer Electronics Association

Consumer Electronics Retailers Coalition

Digital Media Association

Drycleaning & Laundry Institute

Entertainment Merchants Association

Food Marketing Institute

Footwear Distributors and Retailers of America

International Association of Airport Duty Free Stores

International Association of Amusement Parks & Attractions

International Council of Shopping Centers

International Festivals & Events Association

International Franchise Association

Jewelers of America

National Association of Chain Drugstores

National Association of College Stores

National Association of Convenience Stores

National Association of Recording Merchandisers

National Association of Shell Marketers

National Association of Theatre Owners

National Associations of Concessionaires

National Council of Chain Restaurants

National Franchisee Association

National Golf Course Owners Association

National Grocers Association

National Home Furnishings Association

National Parking Association

National Restaurant Association

National Retail Federation

National Ski Areas Association

National Small Business Association

NATSO, Representing America's Travel Plazas and Truck Stops

Outdoor Amusement Business Association, Inc.

Outdoor Industry Association

Pet Industry Joint Advisory Council

Petroleum Marketers Association of America

Petroleum Retailers & Auto Repair Association

Retail Industry Leaders Association

Service Station Dealers of America and Allied Trades

Small Business Majority

Society of American Florists

Society of Independent Gasoline Marketers of America

Specialty Equipment Market Association

Taxicab, Limousine & Paratransit Association

Tire Industry Association

Travel Goods Association

United States Association of Importers of Textiles and Apparel

World Floor Covering Association





State Trade Associations


Alaska Cabaret, Hotel, Restaurant & Retailers Association

Arizona Petroleum Marketers Association

Arizona Restaurant and Hospitality Association

Arkansas Hospitality Association

Arkansas Oil Marketers Association

California Independent Oil Marketers Association

California Retailers Association

Colorado/Wyoming Petroleum Marketers Association

Delaware Restaurant Association

Empire State Petroleum Association

Florida Petroleum Marketers Association

Florida Restaurant & Lodging Association

Fuel Merchants Association of New Jersey

Georgia Oilmen's Association

Georgia Restaurant Association

Hawaii Restaurant Association

Idaho Petroleum Marketers and Convenience Store Association

Illinois Petroleum Marketers Association /Illinois Association of Convenience Stores

Independent Connecticut Petroleum Association

Indiana Hotel & Lodging Association

Indiana Petroleum Marketers and Convenience Store Association, Inc.

Indiana Restaurant Association

Kentucky Petroleum Marketers Association

Kentucky Restaurant Association

Louisiana Oil Marketers & Convenience Store Association

Louisiana Restaurant Association

Maine Energy Marketers Association

Michigan Petroleum Association

Michigan Restaurant Association

Mid-Atlantic Petroleum Distributors Association

Minnesota Petroleum Marketers Association

Mississippi Petroleum Marketers & Convenience Stores 

Missouri Petroleum Marketers and Convenience Store Association

Montana Petroleum Marketers and Convenience Store Association

Montana Restaurant Association

Nebraska Petroleum Marketers & Convenience Store Association

Nebraska Restaurant Association

Nevada Petroleum Marketers & Convenience Store Association

New Jersey Restaurant Association

New Jersey Retail Merchants Association

New Mexico Petroleum Marketers Association

New Mexico Restaurant Association

New York State Restaurant Association

North Carolina Petroleum & Convenience Marketers

North Dakota Petroleum Marketers Association

Ohio Petroleum Marketers & Convenience Store Association

Ohio Restaurant Association

Oklahoma Petroleum Marketers & Convenience Store Association

Oregon Petroleum Association

Pennsylvania Petroleum Marketers and Convenience Store Association

Pennsylvania Retailers' Association

Petroleum & Convenience Marketers of Alabama

Petroleum Marketers & Convenience Store Association Kansas

Petroleum Marketers & Convenience Stores of Iowa

Restaurant Association Metropolitan Washington

Restaurant Association of Maryland

Retail Council of New York State

Rhode Island Hospitality Association

South Carolina Petroleum Marketers Association

South Carolina Hospitality Association

South Dakota Petroleum & Propane Marketers Association

South Dakota Retailers Association

Tennessee Fuel & Convenience Store Association

Tennessee Hospitality Association

Texas Petroleum Marketers and Convenience Store Association

Texas Restaurant Association

Utah Petroleum Marketers & Retailers Association

Vermont Fuel Dealers Association

Virginia Petroleum, Convenience and Grocery Association

Washington Oil Marketers Association/Pacific Northwest Oil Heat Council

Washington Restaurant Association

West Virginia Hospitality & Travel Association

West Virginia Oil Marketers and Grocers Association

Western Petroleum Marketers Association

Wisconsin Petroleum Marketers & Convenience Store Association

Wisconsin Restaurant Association

Wyoming Lodging and Restaurant Association




SOURCE Retail Industry Leaders Association



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