WASHINGTON - NACS and other retail groups applauded Federal Reserve Chairman Ben Bernanke??s commitment to complete final debit swipe fee reform.
In March 29 letters to House Committee on Financial Services Chairman Spencer Bachus (R-AL) and Ranking Member Barney Frank (D-MA), and to Senate Committee on Banking, Housing and Urban Affairs Chairman Tim Johnson (D-SD) and Ranking Member Richard Shelby (R-AL), Bernanke reiterated that that the Fed will complete final swipe fee reform regulations in time for retailers to begin offering customers discounts and other benefits this summer as scheduled, but will likely not hit the originally proposed April 21 deadline.
"This confirms the Fed's commitment to putting forth a rule that has been thoroughly vetted, and underscores the MPC position that there is no need for a congressionally mandated delay," said NACS Senior Vice President of Government Relations Lyle Beckwith.
On December 16, the Fed issued a proposed rule, as directed by Congress in the financial services reform bill, to issue rules to ensure that debit swipe fees are reasonable and proportional to the processing costs incurred. The Fed??s proposed rules would still allow banks to make a reasonable, if not sizable, profit on debit transactions. The Federal Reserve did not seek to eliminate debit swipe fees, but to define a rate that was fair and equitable, with per-transaction rates of 7 or 12 cents both proposed. A survey of banks by the Fed found that debit swipe costs averaged around 4 cents per transaction, providing the banks with a profit margin of either 75 percent or 300 percent, based on the proposed rulemaking.
The Federal Reserve also asked for public comments to the rule, which were originally to be finalized by April 21 and implemented by July 21. However, the banking industry has intensely lobbied to introduce bills to delay reform, effectively seeking to kill it.
"The banking industry and some in Congress want to delay swipe fee reform for as long as two years, but Chairman Bernanke has made it clear that the Fed doesn??t need a delay in implementation," said National Retail Federation Senior Vice President and General Counsel Mallory Duncan.
"Retailers want to begin passing on swipe fee savings to their customers as soon as possible, and today??s announcement means those plans will be able to move forward as planned despite the anti-consumer efforts of some in Congress," said Duncan. "The Fed has received thousands of comments on this proposal and it is appropriate for that input to be carefully and thoroughly reviewed. If they take a few extra weeks, we understand."
"The letter from Chairman Bernanke today is just another step in the very thorough rulemaking process undertaken by the Federal Reserve Board of Governors to finalize debit card fee reforms many small businesses are anxiously awaiting to go into effect this July," added Food Marketing Institute Senior Vice President of Government Relations Jennifer Hatcher. "We applaud Chairman Bernanke and Federal Reserve for their commitment to completing the final rule in advance of the July 21 implementation date. We look forward to the implementation of debit card fee reforms on July 21 that will bring much needed relief to small business and our customers."
Don't allow the banks to thwart our efforts on debit card swipe fee reform. Write your members of Congress today and urge them NOT to delay this important industry initiative. Send a letter today!