A coalition of retailers dedicated to capping and reducing card interchange hopes that U.S. legislators and regulators might follow a European example on the subject.
Last Friday, Sen. Richard Durbin (D-Ill.) and U.S. Rep. Peter Welch (D-Vt.) addressed a letter to Ben Bernanke, chairman of the Federal Reserve Board, asking that he “carefully review” the proposal from the European Commission on credit and debit card interchange.
The European Commission has proposed capping debit and credit card interchange at 0.2% and 0.3% respectively. The European Commission functions as the administrative and regulatory authority for the European Union.
“Our nation is undergoing a transition from a cash and check-based currency system to a system where American dollars are primarily transacted electronically,” the legislators wrote in their July 26 letter. “While this transition has brought many benefits, it has also resulted in the delegation of control over our sovereign currency to private entities.”
The Merchant Payments Coalition, an association of retailers and retail associations opposed to card interchange, expressed hope that the European move might lead to changes in policy in the U.S.
"We welcome (Durbin’s and Welch’s) request for the Federal Reserve to review the European Commission's proposal to reduce swipe fees on debit and credit cards,” the MPC said in a July 26 statement.
“The EU proposal confirms what close observers long have known. The Fed caved to the bank lobbying on debit reform in a way that simply can’t be justified by the facts. The European Union has consulted experts and studied swipe fees for years and found that limiting debit fees to 0.2% helps consumers, merchants and the economy while giving banks are card companies plenty of profit. With this evidence, the Fed should recognize it made a mistake and change its rule to benefit everyone,” the MPC said.
Meanwhile, financial institutions which have banded together to defend card interchange pointed out that the claims of merchants have worn very thin.
"These same retailers who are receiving an $8 billion windfall every year as a result of the Durbin Amendment are now turning around and demanding even more, even though consumers haven’t seen any savings at the register," noted Sam Fabens, spokesman for the Electronic Payments Coalition. " Enough is enough -- these tired old arguments and this battle have been put to bed."