Retailers are breathing a sigh of relief as legislation to regulate credit card “swipe fees” has cleared a final hurdle.
On July 15, the U.S. Senate voted 60-39 to pass its financial services reform bill, known as the Dodd-Frank Wall Street Reform Act of 2010, which includes an amendment to regulate interchange fees, or “swipe fees,” that credit card companies collect for each card transaction. Now that the Senate has passed its bill, the legislation will go to the desk of President Obama to be signed into law.
“By requiring debit fees that are reasonable and proportional to actual costs, retailers will see their costs reduced and will be able to pass on the savings through lower prices and greater value for their customers,” Mallory Duncan, the National Retail Federation’s senior vice president and general counsel, said in a statement.
According to the NRF, swipe fees average between 1 percent and 2 percent for debit cards and 2 percent or more for credit cards. In 2008, Visa and MasterCard charged retailers and other businesses $48 billion in swipe fees, and debit swipe fees accounted for $20 billion of the total.
(Click here to read the May 28, 2010, SNEWS story on swipe fees, “Congress works to relieve retailers on costs of rising swipe fees on credit and debit cards.”)
The bill headed to President Obama’s desk requires the Federal Reserve to set regulations that lead to reasonable and proportional swipe fees for debit cards. The amendment also prevents the credit card industry from interfering with retailers who offer discounts to customers who pay by check, cash or debit card rather than credit cards. In addition, the legislation allows retailers to set minimum purchase amounts of up to $10 for credit cards.
“This is a landmark step forward in protecting Main Street against the excesses of the banking industry,” Duncan of the NRF said in a statement. “Five years ago most consumers didn’t know these fees existed or that the banks were quietly taking billions of dollars out of their pockets. But today we have a bill on its way to the president’s desk that tells the big banks enough is enough.”