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Op-Ed: Small Merchants Want Interchange Flexibility and Value, Not Price Caps
Over the last few months, merchant lobbying groups have stormed Capitol Hill requesting two things: that lawmakers sink federal tax reform by opposing border adjustability and that they support federal price controls on debit interchange fees. On the latter, at least, Congress isn’t listening. The House Financial Services Committee has just released the discussion draft text of the Financial CHOICE Act, which would repeal those price controls. Chairman Jeb Hensarling (R-Texas) deserves credit for his leadership on this issue. Repealing the price controls might just be what small retailers really want. Continue Reading
It’s merchants who are trying to protect their profits
Retail lobbying groups will descend on Capitol Hill this morning. They’ll have a few things on their agenda, including arguing that Congress should keep the 2010 Durbin Amendment, which set price controls on debit interchange fees and imposed new regulations on the handling of debit transactions. We know what these groups, which primarily represent big-box merchants and franchisor corporations, will argue. They’ll say that the Durbin Amendment preserves a free market and that consumers will suffer without it. As I’ve written in these pages before: Lawmakers shouldn’t believe these “alternative facts.” Here’s what’s really happening. Continue Reading
Small Banks And Credit Unions Paying Millions For Durbin Amendment
Last fall, the House Financial Services Committee passed a Financial CHOICE Act that repealed harmful Dodd-Frank Act price controls. That provision would have benefited consumers and small businesses and strengthened small banks and credit unions. The new Congress not only should reconsider it—it should send it to the president’s desk. These price controls, which apply to interchange fees on debit cards issued by some banks, were added to the Dodd-Frank Act at the last minute and without a single hearing. They weren’t a vital part of the post-collapse legislation, but rather an unrelated proposal offered by Sen. Richard Durbin (D-IL) that merchant lobbying groups had been pushing for a while. Continue Reading
ICBA: Don’t buy merchant groups’ latest Durbin argument
A Durbin do over is in the works, and that’s a good thing. Back in 2010, the Durbin amendment, which caps fees on debit-card transactions, was snuck into Dodd-Frank at the 11th hour as a giveaway to the retail sector. Fast forward to 2017 and we see two things—retailers have pocketed the profits intended and promised to consumers, and Congress has an opportunity to right bad public policy in the form of price fixing. Continue Reading
Op-Ed: Data Tells the Truth About the Durbin Amendment
For years the payments industry has been at odds with big-box retail lobbyists over the Durbin amendment — an amendment to the Dodd-Frank bill by Sen. Richard Durbin (D-IL) that sets price controls on debit interchange fees. Why is this debate resurfacing again now? Because after six years, American consumers are waking up and realizing they have been cheated, that the policy is a failure. Community banks, credit unions, and other financial institutions recognized right away that the Durbin amendment’s price controls would pose a serious problem. But a few members of Congress have taken a bit longer to come around, in part because the technical description of the law makes a good story for merchants. Big-box retailers also have a track record of leaving out key data and speaking for community banks and credit unions — those actually impacted by this harmful regulation. Continue Reading
NAFCU: Congress Can Prove Its Mettle by Standing Up for Consumers
While Election 2016 is in the rearview mirror, our work is not done. We must come together to ensure that we find common ground to build a better nation for everyone, regardless of political affiliation. One area that we can all agree needs improvement is data security. Of particular concern is the rampant growth of new retail data breaches, which have become all too regular. The nation’s data security standards must be improved to address this trend, and fortunately, we have a great foundation to build upon. Continue Reading
Sorry, merchants, price controls aren’t free market
In September, the House Financial Services Committee (HFSC) approved legislation that would repeal a Dodd-Frank provision called the Durbin Amendment that set limits on the fees some banks charge retailers to swipe debit cards. In a frenzy of Orwellian doublespeak before and after this vote, Durbin Amendment supporters argued the provision is “free market” (it boosts competition!) and consumer friendly (it’s a vital part of U.S. antitrust law!). The majority of the HFSC didn’t fall for it. Read more
Retailers have jumped the shark
How long does it take to admit something isn’t working? One year? Four? Longer? Sixty-five percent of all new television series are cancelled after their first season. The average tenure for a head coach of an SEC football team is just over four years. New Coke lasted seven years—but having suffered through that era, I can say that was probably too long. (The late Peter Jennings thought so. He heralded the return of classic Coke by breaking into daytime TV.) This week marks the five-year anniversary of implementation of the Durbin Amendment, a provision in the Dodd-Frank Wall Street reform bill that set price controls on interchange fees for some debit cards. Like New Coke and Fonzie’s infamous shark jumping stint in the fifth season of “Happy Days,” this idea was a bad one. Continue Reading
CBA: It is time to abolish the Durbin Amendment
Government intervention in the markets while well-meaning often leads to unintended consequences. Flawed policy like the price controls on debit card interchange fees included in the Durbin Amendment to the Dodd-Frank Act was full of promise by merchants to reduce costs for consumers but instead has left them holding the bag at the checkout. Thankfully, the House Financial Services Committee soon has an opportunity to rectify this harmful policy. As the industry’s leading voice representing the retail banking industry, the Consumer Bankers Association (CBA) is dedicated to ensuring that our members, from the largest financial institutions to many regional and mid-size banks, have the opportunity to provide small businesses and consumers with access to important financial services. The Durbin Amendment was written without consideration of the negative impact it would have on these financial services and how it would ultimately harm our customers. Continue Reading
NAFCU: House Financial Services Committee Must Endorse Durbin Amendment Repeal
The House Financial Services Committee will mark up Chairman Jeb Hensarling’s (R-Texas) Financial CHOICE Act on Tuesday. One provision of the legislation that we strongly support is repeal of the Durbin Amendment. This amendment, which set price controls on debit interchange fees for some financial institutions, was added to the Dodd Frank Act during conference committee at the behest of big-box retailers. These interests pledged the provision wouldn’t affect “exempt” entities — under the Act, those with holdings less than $10 billion. Continue Reading