Credit/Debit Card Swipe Fee legislation

All,

I just received notice from our trade association about a piece of legislation to wipe out most of the reforms to credit/debit card swipe fees that were passed last year (and have not still been implemented). As both a consumer and a retailer, we are impacted by how high these fees are. I will not profess to be an expert on this, but I know anytime these fees go up, we either have to eat the fees, or raise prices to cover them, which is not good for anyone.

From the NRA site:
The NRA and our members fought for years to fix a broken debit-fee market. Merchants are paying billions of dollars in excessive swipe fees when guests pay by debit card. Congress made the reforms, through the 2010 Durbin Amendment and the Federal Reserve in late December issued draft rules to enforce the law, proposing to scale back merchant debit-card swipe fees from an average of 44 cents per transaction to a cap of 7 to 12 cents per transaction. Now the banks and debit-card companies are making major headway in killing those reforms.

>> More than 100 Members of Congress are already cosponsoring the Tester/Capito bills S. 575 and H.R. 1081, to delay the Durbin Amendment’s debit-fee reforms for merchants -- by as much as two years.

>> Action is ramping up as the Federal Reserve gets close to publishing final rules to bring down debit swipe fees---implemented July 21, 2011.

Yesterday afternoon Senators Tester and Corker released what they're touting as their "compromise" legislation on swipe-fee-reform delay. The Senate vote on interchange could now be as early as tomorrow afternoon or Thursday morning. Based on studies from the National Restaurant Association, The Tester amendment calls for a suspension and repeal of the Federal Reserve’s rule on swipe fees. During the time period of the rigged Tester study, U.S. consumers and businesses will lose $1 billion per month (over $12 billion total) and 95,000 new jobs. This will be a direct giveaway to 100 mega-banks at the expense of everyone else.

Please contact your Senator's office with a reminder that you are opposed to the Tester-Corker effort to kill swipe fee reforms. One more round of contact to all Senators is urgent. To contact your Senator and Representative, please go to the following site: http://www.bipac.net/issue_alert.asp?g= ... parent=NRA where they have a form that automatically sends the pertinent talking points to them.

I have more information that I can send you via email. If you want more, please PM me on this site with your email and I can forward it to you.

A "non-issue" as of 3:30pm today.

http://www.usatoday.com/money/perfi/cre ... fees_n.htm

Fees will be capped.

I have heard the issue from both sides. My father owns a gas station and constantly complains about getting screwed over by the banks, but I think they are providing a pretty nice service. A small business couldn't handle handing out that much credit.

On the other-hand, my wife works for an bank and the banking industry is freaking out over the potential loss of revenue. The banks will have to come up with a way to recover the lost revenue and I'm betting it will be with fees, higher loan rates, lower savings rates, ect.; which will hurt everyone.

I think there is a happy medium that is being overlooked. It seems it is either going to lopsided one way or the other. I'd think both parties could survive on cutting the swipe and % fees by around 50%.

Good article on the issue on Salon.com. Best line: "It turns out that Wall Street power does know some limits. That limit is Walmart."

Good article on the issue on Salon.com. Best line: "It turns out that Wall Street power does know some limits. That limit is Walmart."

Interesting...Best quote in the article is:

..."Big merchants challenged big banks, and the normal partisan dividing lines in the Senate suddenly became confused"...

Personally, I'm happy as hell this failed...(A) Because I hate/loath anything "Wallstreet" and (B) I can't wait to start reaping the savings from retailers big AND small now that they don't have to pay such exorbatant fees. We WILL reap the "savings" won't we ?....

As much of a pain as it is for customers, you have to admit this is one issue that concerns the proprietors of Pat's Steakhouse not one little teensy tiny bit! Unless they've changed cash (as in American currency, Krugerrands, beaver pelts, etc.) only policy recently.

Does anybody really think that any retailer, WalMart or an independent restaurant in Louisville, is going to reduce their retails/price based on this minor reduction of costs? I am not being critical in ANY way. But will they pass on the savings? Or will they just pocket that profit and move on? My guess is that the consumer will not see any change in retails/pricing for a hamburger/taco/beer/toilet paper/etc. Is it wrong to not pass on your savings of cost, or is it capitalism and free market at its best?

It has been documented that restaurant costs for produce has risen dramatically in the past few months/years. If the cost of tomatoes goes down this summer because of a bumper crop (supple and demand), are independent and chain restaurants going to lower their retails/menu pricing on Bruschetta? In these times, I think not. Is that a bad thing? I'm not in the "business", but I am guessing, probably won't happen, just like the roll of toilet paper never goes back down after it goes up because of "costs". Again, I am not being critical, it is the American way, capitalism and free market dictates the price, but if you think this cost reduction will be past onto the consumer, think again.

What would Donald Trump do?

I doubt Wal-Mart would lower prices immediately after such a change, but the competition to have the lowest prices is very intense for discount stores. That's capitalism, too. So I would imagine that much, if not all of the savings will eventually be passed on.

This is blocking legislation that was passed last year. The fees never went into effect. No savings to pass on.

This is blocking legislation that was passed last year. The fees never went into effect. No savings to pass on.

Actually only partially correct...No saving to pass on YET. The original law reeling in these fees was passed last year (might have even been the year before...who's counting) but the Treasury Dept delayed implementation until (I believe it is) July 21st of this year. Hr-1081 and S-575, the Bills we are discussing, were efforts to gut the original law. The Senate bill, having ran into the Walmart buzz-saw virtually guarantees the new fee structure will go into effect next month.

I'm confused. Here's what I thought had happened:

Old status quo: High(ish) fees
Law passed last year: Cut fees.
Senate bill under consideration: Canceled the cut; return to high fees.
Yesterdays' vote (the Walmart kill): Killed the canceling of the cut, return to low fees.
Current status quo (whenever everything takes effect): Low fees.

Am I wrong?

I'm confused. Here's what I thought had happened:

Old status quo: High(ish) fees
Law passed last year: Cut fees.
Senate bill under consideration: Canceled the cut; return to high fees.
Yesterdays' vote (the Walmart kill): Killed the canceling of the cut, return to low fees.
Current status quo (whenever everything takes effect): Low fees.

Am I wrong?

If you are wrong, I'm right there with you. I'm still interested to see what happens to the banking industry if this deal goes through.

debit card fees add up to "a $16 billion pool of money from which $8 billion flows to just 10 banks

That is a big chuck of change that is disappearing.

Am I wrong?

Nope...Not wrong. I guess that given the prevailing attitude towards anything "Wallstreet", that WalMART (and the retail world in general) had bigger stones this time around.

Get ready folks....The price of beer is comin' down

That is a big chuck of change that is disappearing.

Ahhhh hell, they'll make that up in a matter of weeks...Buy up a few million oil futures, spread the rumor that there is a shortage, get the the price to spike somewhere north of $125 a barrel, sell it off and "poof" there are your billions back. Hey, it worked for Goldman Sachs.

http://napoleonlive.info/economics/oil- ... eculators/

Leave the gas/oil alone! It just went below $4/gal yesterday here!

I'm not going to count on seeing any reduction in costs or other benefits from this new legislation. So many businesses have been skirting by, they'll probably use the extra change to show a profit, hire a new employee or upgrade something that had been put on hold. If anything, we may just see prices hold steady for a few months extra.