Retailers Say Repeal of Swipe Fee Reform Would ‘Undermine Transparency and Competition’ and Harm Consumers

WASHINGTON–(BUSINESS WIRE)–The National Retail Federation today called on the House Financial
Services Committee to reject efforts to repeal debit card swipe
fee reform
as it considers approval of the Financial Choice Act.

“Debit card swipe fee reform has brought competition and transparency to
the debit card payments market,” NRF Senior Vice President for
Government Relations David French said. “Repealing reform would only
undermine transparency and competition, further lining banks’ pockets.”

“Swipe fees are a major concern, especially for small retailers,” French
said. “If debit swipe fee reform is repealed, costs to retailers will
only increase, meaning higher prices for consumers and less opportunity
for retailers to grow their businesses, provide jobs and support
community efforts. Rather than repeal a successful provision of law that
has brought competition into the payments market, we encourage Congress
to support the future of payments and make sure competition is

French’s comments came in a
letter to the committee
, which began
this morning on the Financial Choice Act, legislation
sponsored by Chairman Jeb Hensarling, R-Texas, that would repeal debit
swipe fee reform as part of a larger rollback of the Dodd-Frank Wall
Street Reform and Consumer Protection Act. Committee approval of the
bill could come today or Wednesday, with a vote by the full House
expected later this month.

The committee is moving forward today even though only a single
has been held on the nearly 600-page bill. No retailers were
allowed to testify at last week’s hearing despite the impact of the
swipe fee issue on the industry. Nonetheless, dozens of retailers held
more than 100 meetings on the issue with lawmakers on Capitol Hill the
same day. NRF submitted a statement
for the record
and is running digital
and has delivered more than 7,000 email petitions addressing consumer
and competition
that urge Congress to preserve debit card reform.

Debit reform was enacted as part of Dodd-Frank in response to the card
industry’s practice of price-fixing the debit card “swipe” fees banks
charge merchants to process transactions. The fees previously averaged
1-2 percent of the purchase amount, and virtually all banks that issue
cards charged the same.

Under reform regulations that took effect in October 2011, large banks
are limited to 22 cents per transaction, down from about 45 cents in the
past. The limit saved retailers about $8.5 billion in the first year
alone, with close to $6
billion of the savings passed along to consumers
, according to a
study by economist Robert Shapiro. Banks that set the fees competitively
and independently are exempt from the limit, but virtually none have
done so. Banks with under $10 billion in assets are also exempt.

Reform also required that merchants be given at least two choices in the
networks that route debit transactions to the bank for processing,
typically one controlled by Visa or MasterCard and a competing,
independent network that offers advantages such as lower fees, better
service or better security.

NRF is the world’s largest retail trade association, representing
discount and department stores, home goods and specialty stores, Main
Street merchants, grocers, wholesalers, chain restaurants and Internet
retailers from the United States and more than 45 countries. Retail is
the nation’s largest private sector employer, supporting one in four
U.S. jobs – 42 million working Americans. Contributing $2.6 trillion to
annual GDP, retail is a daily barometer for the nation’s economy.



National Retail Federation (NRF)
J. Craig Shearman (855) NRF-PRESS