WASHINGTON, March 15, 2011 /PRNewswire/ -- Today, the Electronic Payments Coalition announced its support of the Debit Interchange Fee Study Act (S. 575), introduced by a bipartisan group of nine senators including Senators Jon Tester (D-MT), Bob Corker (R-TN), Tom Carper (D-DE), Pat Toomey (R-PA), Ben Nelson (D-NE), Chris Coons (D-DE), Pat Roberts (R-KS), Mike Lee (R-UT), and Jon Kyl (R-AZ). The legislation calls for a two-year delay of the proposed Federal Reserve debit card rule.
S. 575 also calls for a study on the consequences for consumers, smaller financial institutions, and other stakeholders on this rule that has the federal government setting prices at 7 to 12 cents per transaction – an amount well below the cost of running a debit card program.
"The Durbin amendment was rushed through with literally no consideration as to the impact on consumers, community banks and credit unions, or our fragile economic recovery," said Trish Wexler, spokeswoman for the Electronic Payments Coalition. "This new legislation is a much needed 'time out' to make sure this rule won't end up changing the debit card as we know it today. Let's get this right – it's just too important to rush through without this review."
In recent weeks, President Barack Obama's key economic advisors, including Federal Reserve Chairman Ben Bernanke, FDIC Chairman Sheila Bair, and Comptroller of the Currency John Walsh have all raised serious concerns with the rule – specifically about the effectiveness of the so-called "carve out" for community banks and credit unions.
Chairman Bernanke stated that "it is possible that the exemption will not work in the marketplace." Chairman Bair concurred that small institutions may not be protected, and said "we think that needs to be fixed." Comptroller Walsh stated that the rule "has long term safety and soundness consequences – for banks of all sizes."
“The failed exemptions included in the Durbin amendment for smaller financial institutions and government prepaid card programs were a clear admission from the outset that the amendment would be harmful,” added Wexler. "We are glad that Congress has recognized the possibility of these consequences, and is taking the time to ensure that all of these important groups are protected."
Last week, the NAACP's Hilary Shelton raised concerns as to the rule's impact on minorities, and asked that this particular impact be studied. "Given the complexity of this issue, we believe that it should be further examined fully to ensure that it does not have a negative impact on the communities it was meant to help," said Shelton.
Yesterday, noted conservative and editor of the right of center blog RedState, Erick Erickson, wrote about the rule, saying "the lobbying efforts of these merchants have killed any attempts to codify passing savings along to the consumers, guaranteeing that retailers will get all of the profits for themselves."
For more information, visit www.electronicpaymentscoalition.org.
About the Electronic Payments Coalition
The Electronic Payments Coalition (EPC) includes credit unions, banks, and payment card networks that move electronic payments quickly and securely between millions of merchants and millions of consumers across the globe. EPC's goal is to protect the value, innovation, convenience and competition in today's growing electronic payments system. EPC educates policymakers, consumers, and the media on the system's role in economic growth, and the importance of protecting consumer choice and stability for the continued growth of global commerce.
SOURCE Electronic Payments Coalition