While merchants have been lobbying for the new swipe fee laws to pass, banks have been lobbying Congress to delay the passing of the new laws. The decision came in on June 8th, when a Senate vote came in short of the 60 votes needed to delay the implementation of swipe fee reform. It is a huge victory for small businesses and for consumers.
The vote was a big blow to large banks, which had put forth an intensive lobbying effort in support of the delay. The vote came in at 54-45 and the House of Representatives is now expected to vote down the amendment to delay as well. The Federal Reserve will have until July 21 to implement the final rule on capping the fees.
According to Senator Bob Corker (R-Tenn.), who with Senator Jon Tester (D-Mont.) co-sponsored the amendment in favor of delaying the swipe fee reform, “The people have spoken. This was a tough fight … I apologized to my colleagues non-stop for causing them to have to be involved in this.”
Quite frankly, Senators portrayed a stuck-in-the-middle feeling. Most shared that whichever way they voted, one important constituency would come out on the losing end. Senator Tom Carper (D-Del.), a backer of delaying the swipe reform program, said, “They don’t want to choose between their two favorite children.”
Fees and Charges
According to Huffingtonpost.com, banks rake in about $16 billion a year from swipe fees they charge merchants for accepting debit card payments from consumers. Of the $16 billion, $8 billion of this money goes to only 10 banks. According to merchants, if they did not have to pay the excessive swipe fees then the stores could lower the prices that consumers pay. Nevertheless, not all of the savings are expected to go back into consumers’ wallets.
Under current policy, banks have been charging merchants an average of 44 cents per transaction. That is based on the current schedule of charging a swipe fee equal to 1%-2% of the transaction. After the implementation of the new law, the cap on transaction fees will be a flat 12 cents per transaction. Banks and credit unions which have less than $10 billion in assets will, however, be exempt from the new rules and allowed to charge higher fees.