NRF letter follows in footsteps of Senator Durbin’s support of retailers
In the midst of one of the most antagonistic lobbying battles in Washington, U.S. Sen. Dick Durbin (D-Ill.) filed a letter questioning whether the credit card swipe fees that large banks and card issuers charge are hindering competition in electronic payments, as Innovative Retail Technologies reported.
Now, in a letter to U.S. government agencies last week, the National Retail Federation is adding fuel to the fires with a new statement regarding debit card swipe fees enacted by the Federal Reserve five years ago.
In its letter, the NRF said that although a new law under the Dodd-Frank banking reform act meant to limit swipe fees has helped somewhat, the charges remain too high and fail to fulfill Congress’s goal of appropriately limiting them.
The letter was sent as Sen. Dick Durbin (D-IL), who has sponsored an amendment to Dodd-Frank that would lower the fees, also filed a letter asking whether EMVCo—the consortium of six credit card issuers that sets the fees—is hindering competition in electronic payments.
“In most cases, 24 cents per transaction represents a significant savings over the prior non-competitive pricing,” NRF SVP and general counsel Mallory Duncan said in a letter to the Federal Reserve, which is reviewing the cap based on requirements of the federal Paperwork Reduction Act. “However, it is still substantially higher than issuers’ incremental costs.”
Duncan said the cap “has worked moderately well” but that “additional changes are necessary” if Congress’ goal of swipe fees that are proportional to banks’ costs for processing transactions is to be realized.
According to the NRF, merchants have passed along two-thirds of the $8.5 billion in annual savings to consumers, but Duncan added that there would be even more money to share if the Fed has established the lower cap anticipated by lawmakers.
Despite support from Durbin, retailers have not seen much headway in the battle to lower swipe fees. Durbin requested information on EMVCo, whose six members—American Express, Discover, JCB, MasterCard, UnionPa, and Visa—handle $50 billion in swipe fees each year. Retailers believe that credit transactions made using EMV cards should carry the same, lower swipe fees charged for debit transactions.
Duncan said the shift of more fraud liability to merchants last fall under the conversion to Europay MasterCard Visa chip-and-signature cards is evidence that the 0.05 percent for fraud recovery “may no longer have a legitimate basis.”
