Debit card fees: Senate discusses limiting swipe costs to stores
Debit card fees are the topic of debate in the Senate on Wednesday. Some lawmakers oppose a proposal from the Federal Reserve to lower the debit card fees that stores must pay when a card is swiped.
WASHINGTON (AP) — Lawmakers on both sides of a battle over debit card fees used populist-style appeals on Wednesday as the Senate neared a vote on whether to block a Federal Reserve plan to lower the fees that stores must pay banks each time a shopper swipes a debit card.Skip to next paragraph
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Financial institutions and their supporters on Capitol Hill have been fighting a Fed proposal to cap, at 12 cents, the fee stores must pay the banks each of the 38 billion times that shoppers use debit cards every year.
Those fees currently average about 44 cents per swipe, transactions that earn banks and credit card companies $16 billion a year, the Fed says.
The battle has pitted banks against merchants, two industries that lawmakers hate to cross because of their influence back home and their campaign contributions.
With a showdown voted slated for later Wednesday, the Senate's chief proponent of lowering the swipe fees, Sen. Richard Durbin, D-Ill., said that taxpayers had helped banks "in their darkest hour," a reference to the $700 billion financial industry bailout of 2008. He said banks showed their gratitude by showering huge bonuses on their executives.
"Honestly, are we going to stand here and say we can't protect small businesses across America struggling to survive?" said Durbin, the Senate's No. 2 Democratic leader.
Responding later, a leader of the drive to prevent the Fed from capping the fees also sought to appeal to everyday Americans, saying he was fighting for small community banks and credit unions, not the nation's biggest financial institutions.
"These small guys who had nothing to do with the financial crisis do not have that same flexibility the Wall Street banks have" to make up for lost debit card fees by finding revenue elsewhere, said Sen. Jon Tester, D-Mont. "and these are the banks in Montana. These are the folks that I want to make sure have a fair shake."
Last year's financial overhaul law ordered the Fed to issue a rule on debit card fees that will take effect on July 21. The Senate vote will be on an effort to delay the regulations for a year and order the Fed and three other agencies to study whether the proposal is fair — and rewrite it if at least two agencies decide it is not.