NEW YORK - An op-ed in the February 1 American Banker penned by Visa Chairman and CEO Joe Saunders says that the Federal Reserve??s "proposed rules for implementing the debit provisions" of the financial services reform law "go too far," and that the rules would create "significant unintended consequences that will harm consumers and the economy."

Saunders continues: "Visa is strongly opposed to the debit provisions, and we are working with the entire industry to help Congress and the Federal Reserve better understand their unintended consequences. The risks are clear and extraordinary. To begin with, price fixing is bad public policy, with many bad outcomes that are difficult to predict. In this case, large banks will see the business case for their popular debit programs change dramatically."

He concludes that Congress "never had the opportunity to deliberate; there were no hearings, no debate and no studies related to the debit provisions. We hope that, once members of Congress understand the true impact of the proposals, they will reexamine the law. At a minimum, implementation should be delayed so Congress can hear both sides in this debate. Also, joint federal agencies should do an objective assessment of the effects before the proposals are adopted."

In a rebuttal, Jeffrey Shinder and Matthew Cantor, managing partner and partner at Constantine Cannon, respectively, penned an op-ed in Friday??s American Banker that calls out Visa??s hypocrisy.

"For years, to avoid antitrust liability for price-fixing, Visa has consistently denied that interchange is a price. Rather, Visa claimed that interchange is a 'transfer?? that was necessary to balance the financial incentives of the banks that issue payment cards and the banks that contract with merchants to accept them. Now, with the prospect of substantial reductions in debit interchange on the horizon, Visa has, unsurprisingly, revisited its position. Now, interchange is a price after all and, any regulation of it is price-fixing."

They conclude: "Finally, Visa's claim that consumers will pay more and get less with the proposed debit regulations is similarly disingenuous. It fails to acknowledge that anti-competitive and unnecessary interchange fees are nothing more than a regressive and hidden consumption tax that is paid by all consumers. As the retail industry is vigorously competitive, merchants almost certainly will pass along any interchange reductions that they achieve to their customers and less affluent cash customers will benefit from these reductions the most.

This Thursday at 10:00 am Eastern Time, Congress will hold its eighth public hearing on debit and credit card swipe fees.

The hearing, held in the House Subcommittee on Financial Institutions and Consumer Credit, will take a look debit card swipe fee provisions included in the financial services reform law. Testifying on behalf of the Merchants Payments Coalition (MPC) is Doug Kantor, general counsel for NACS, and also David Seltzer of 7-Eleven.

"This marks an important moment in the swipe fee battle for merchants. We must preserve the fair and balanced market reforms that were put in place last year," said NACS Senior Vice President of Government Relations Lyle Beckwith. "The Federal Reserve now has the authority to fix a broken system of blatantly unfair debit card swipe fees and end the Visa/MasterCard price fixing."

Do Your Part to Preserve Debit Swipe Fee Reform
Retailers can take part in ensuring our hard fought battle does not get delayed or repealed. Retailers should take action in the following three ways:

• Send a comment to the Federal Reserve Board in favor of their proposed debit fee setting regulations. In December, after extensive analysis, the Federal Reserve released their first draft of these regulations, which include limiting the per transaction fee for debit purchases to between 7 and 12 cents. This represents a reduction in fees of approximately 80%. There is a comment period currently underway, in which the public is invited to weigh in on the proposed regulations. The comments, thus far, are almost entirely from bankers (what else do bankers have to do all day but write comments to the Fed?) who are trying to water down, delay or repeal the regulations. It is extremely important to balance out the public comments; click here to send your own letter, which you can edit or write in your own comments.

• Register for NACS Day on Capitol Hill March 9-10. Join your industry colleagues in Washington, D.C., to communicate your voice to your members of Congress. NACS will set up appointments for you and conduct a group briefing prior to your meetings. Additionally, there will be NACS staff attending most meetings to help you find your way. The credit card lobby is planning on bringing hundreds, if not thousands, of bankers to town this month to lobby against the swipe fee regulations. Do not let them distort this issue! Stand up for yourself and your business! Click here to register.??

• Respond to NACS Calls to Action. As this battle continues, NACS will be sending calls to action requesting you to write letters, make phone calls or arrange appointments with your members of Congress back home. When you get these emails please open them and respond to the request. It is because of the tremendous grassroots pressure the convenience store industry placed on Congress that these much-needed reforms are close to becoming a reality. It is essential that we keep up the pressure these last few months! Click here to send the most recent letter.

Contact Lyle Beckwith at with any questions on how you can help preserve swipe fee reform.