- WHITE PAPERS
The Senate voted Wednesday to reject a delay for the much needed debit-card swipe-fee reforms being released by the Federal Reserve. The reforms are scheduled to go into effect July 21 and enable the Reserve to cap debit-swipe fees imposed by card processors to 12 cents, as opposed to the average 44 cents per transaction.
The National Restaurant Association sent a letter to members of the United States Senate urging them to reject an effort to delay the debit-card swipe-fee reforms.
“Swipe-fee reform has been and will remain a top-priority issue for our members,” said Scott DeFife, executive vice president of Policy and Government Affairs for the NRA. “Debit and swipe fee rates are increasing at levels that often exceed the rate increases restaurant operators face for all other costs, including food, energy and health care. Every penny matters, as operators work to streamline costs so that they can pass every bit of savings along to their guests.”
The National Restaurant Association and its members, along with the Merchants Payment Coalition, have fought successfully for reforms to the broken debit-card swipe fee market. The Tester-Corker amendment would have delayed the reforms instructing the Federal Reserve to ensure that the debit-card swipe fees merchants get charged are in line with what it costs to process transactions.
“As restaurants struggle to emerge from a fragile economic recovery, we are even more acutely aware of the need to fix the broken market for debit-card swipe fees,” DeFife said. “The nation's restaurateurs can't do anything about the cost of accepting debit cards. Merchants can't negotiate fees or limit increases. There is literally no market force at work today to constrain the increases the card networks impose.”
The Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law by President Barack Obama in July 2010 to serve as a protective measure for consumers and retailers, and to provide transparency and accountability in the financial system.
One aspect of the bill now allowsmerchant payment processing systems to pick the cheaper network for conducting debit-based payments.
“When you swipe a debit card, people have the option of using their PIN or using it as a credit card. What the banks would do would pick the most expensive (transaction processor) because that was the most profitable for them,” Henry Helgeson, co-CEO of Merchant Warehouse, said last year. “Now what this bill does, is says every debit card has to have at least two (partner processors) so the merchant can pick which network they want. And, of course, they will pick the lowest one.”
Click here to watch a video of DeFife addressing swipe-fee reform during the National Restaurant Association's Restaurant, Hotel-Motel Show in May.