U.S. retailers launch campaign to protect new law on debit card swipe fees
Washington, D.C., United States (AHN) – The National Retail Federation launched a campaign to protect a new federal law on debit card swipe fees. The campaign seeks to weaken the large-scale lobbying attacks on the law by banks.
The retail industry will ask merchants to seek meetings with key lawmakers on June. The campaign will also use print and radio ads in Washington and six to 12 key states, and video clips. The aim of the campaign is to solicit public comments in favor of lower interchange or the regulation on swipe fees, which will take effect this summer.
Last summer, Congress approved a measure that mandated the Federal Reserve to change the way banks charge merchants for accepting debit cards. The regulation would reduce the swipe fees by up to 70 percent to 7 to 12 cents per swipe from the current formula that charges an average 1.14 percent of the price tag.
Major banks and other financial institutions are against the reduction of swipe card fees and initiated an intense lobbying campaign against the new law. They also sought the postponement of the law’s implementation.
The banks and card companies are battling the new law because of potential loss of income since interchange fees earned them almost $17 billion in 2009. They said the amount was used to offset cost of offering checking accounts and customer perks programs such as debt card reward points. In anticipation of the new regulation, which would reduce their income, banks hiked ATM and other fees.
Last week, Federal Reserve Chairman Ben Bernanke told a Senate Banking Committee hearing that a proposal to exempt small lenders from the law would not work and may cause small banks to fail.
The NRF supports the law because the cut in debit card swipe fees would be passed on to shoppers through lower prices or better service.
The cap on debit card swipe fees charged to merchants is a requirement of the Dodd-Frank Act, which provided exemption to card issuers with assets of less than $10 billion.