The National Restaurant Association and 30 state restaurant associations recently joined more than 200 other merchant organizations in asking members of the U.S. House of Representatives to give restaurants and other merchants a break on some payment card-processing fees. In a letter to House members, the NRA urged members to include an amendment, sponsored by Sen. Dick Durbin (D-Ill.) and previously passed in the Senate, in the final financial reform bill.
"Interchange fees are often restaurants' third greatest operating expense, behind labor and food costs. Merchants pay about $48 billion in interchange fees every year," said Scott DeFife, executive vice president for policy and government affairs for the association in a news release. "We are grateful to Senator Durbin for his leadership on this important issue, and appreciate the bipartisan support for addressing the problem of interchange fee practices and for providing relief to businesses who have seen their interchange fees skyrocket in recent years."
Interchange fees, also known as "swipe fees," and related contractual restrictions benefit credit card companies and card-issuing banks at the expense of merchants and consumers. The amendment would authorize the Federal Reserve to issue regulations that ensure interchange fees imposed on debit card transactions are "reasonable and proportional" to the costs of processing transactions. Debit transactions come directly from consumers' checking accounts and are not credit, yet the interchange rate on debit transactions continues to increase.
The proposal would also permit merchants to set minimum and maximum transaction levels for credit cards. As a result, retailers would be free to choose their payment methods. Under current rules, merchants that accept credit or debit cards cannot set minimum transaction levels, although they sometimes lose money on small charge or debit transactions. Additionally, the amendment would increase competition and allow businesses to offer discounts to customers who pay with cash, checks, PIN debit, etc., which carry lower rates than credit cards.
The association has long advocated for fairer transaction fees and is a member of the Merchants Payment Coalition, a group of retailers, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses who are fighting against unfair credit card fees and fighting for a more competitive and transparent card system that works better for consumers and merchants alike.
The coalition's member associations collectively represent about 2.7 million stores with approximately 50 million employees. The coalition recently launched a new ad campaign to educate Congress and the public about interchange fees.