Last Thursday, the Senate voted to approve an amendment, SA 3989, sponsored by Senator Dick Durbin of Illinois. The amendment inserts a section, “Reasonable Fees and Rules for Payment Card Transactions,” into the Electronic Fund Transfer Act. As you might guess from the title, the section sets forth several guidelines covering the transaction fees that an issuer or payment card network can charge on debit card transactions; the amendment doesn’t address credit card transactions.
The amendment directs the Federal Reserve to establish rules “to ensure that debit interchange fees are reasonable and proportional to the processing costs incurred.” It also prevents card networks from penalizing sellers who offer discounts to customers, and allows sellers to offer discounts to customers who pay by cash, check or debit card. In addition, it allows merchants to set a minimum size for debit card transactions. The amendment exempts banks and credit unions with less than $10 billion in assets.
Not surprisingly, the amendment has both supporters and opponents. The National Retail Federation and the National Association of Convenience Store Owners are among the former group; the latter group includes many financial institutions, Roll Call reports.
According to Senator Durbin’s website, credit and debit card networks charged a total of $48 billion in transaction fees in 2008.