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.
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Each side was claiming to have consumers' interests at heart. Merchants said today's fees, typically 1 percent to 2 percent of the purchase, push their prices higher and make it tougher to hire new workers. Banks say the Fed proposal discounts overhead costs like preventing fraud and argue that slicing the fee would force them to find other sources of revenue such as raising their charges for checking accounts.Skip to next paragraph
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The fight over so-called interchange fees for debit cards crosses party lines. While Durbin is the chief supporter of the Fed's proposal, the main foes are Tester and Bob Corker, R-Tenn.
The provision requiring the Fed to set fair debit card fees was included in last year's financial overhaul law by a 64-33 Senate vote and was written by Durbin. There was no separate House vote on the issue. President Barack Obama signed the overall law after Congress passed it over solid Republican opposition.
Durbin, using Senate procedures, is forcing Tester and Corker to gather support from 60 of the 100 senators to win. Though aides and lobbyists on both sides say Tester could be close to prevailing, they concede it will be tough to defeat the veteran Durbin, who wields considerable influence as a party leader.
Even so, Durbin faced some challenges. Six senators — including five Democrats — who voted for his amendment last year are no longer in the Senate. And at least two senators who supported him a year ago — Kay Hagan, D-N.C., and Mike Crapo, R-Idaho — are backing Tester's effort to delay the Fed rules.
On Tuesday, Durbin recalled the $700 billion bailout passed in late 2008 as the financial industry teetered on the brink of catastrophe — followed by the widely unpopular bonuses that many financial firms awarded executives. He said the largest banks were "fighting viciously" to block the Fed rule because they have the most to lose.
"Are we going to be shaken down a second time?" he asked. "That's what this debate is all about."
Tester, a first-term senator facing re-election next year in a GOP-leaning state, said he was not championing big banks.
"No one needs to shed a tear for them," he said on the Senate floor.
Instead, he said he was on the side of small banks and credit unions that dot his rural state, which he said could vanish if their revenues collapse.
"Fewer banking options in rural America is a death knell for rural America," Tester said. "But that is where we are headed."
"To call this a Wall Street bailout is beyond demagoguery," Corker told reporters.