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NRF asks Senate to require ‘reasonable and proportionate’ cards


Washington, D.C. The National Retail Federation on Monday urged the Senate to approve amendments to financial services reform legislation that would direct the Federal Reserve to determine “reasonable and proportionate” transaction fees for debit cards and make it easier for merchants to reward customers who pay by cash, check or debit rather than credit card.

“Allowing banks to continue skimming off the top of debit-card payments is unfair to both merchants and our customers,” said NRF senior VP government relations Steve Pfister. “For Main Street America, these amendments would restore full faith and credit to the handling of our nation’s currency. Debit cards are merely an electronic form of checks and were initially marketed as such; banks honored debit transactions at face value because of the savings over the costs of handling paper checks.”

However, in recent years those same banks have begun charging a transaction fee on these plastic checks, exploiting the lack of specific congressional authorization for the Fed to govern these products, Pfister said.

As a result, Pfister continued, merchants estimate that they paid more than $10 billion in fees on debit-card transactions last year when paper checks drawn on the same accounts would have passed at face value, and the fees drive up prices charged to consumers.

Debit-card fees are part of the $48 billion in interchange fees collected by Visa and MasterCard banks each year. Averaging about 2% for credit cards and 1% for debit, interchange is a fee charged to merchants each time a customer swipes a card to pay for a purchase. Under card-industry practices, the swipe fees are passed along to consumers, driving up retail prices an estimated $427 for the average household each year.

Majority Whip Richard Durbin, D-Ill., last week introduced a package of amendments to the Restoring American Financial Stability Act of 2010, the financial services reform legislation being debated in the Senate, saying he wanted to help “bring some fairness” to the interchange system.

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