Senator Durbin Studies Canada's Credit Card System

The Illinois senator argues for a system that patterns Canada's, where debit card swipe fees are zero.

May 03, 2011

WASHINGTON ?" As U.S. lawmakers continue their battle over interchange fees, Senator Richard Durbin has begun arguing that the United States should copy the Canadian system, where interchange fees on debit card transactions are zero, the Financial Post reports.

"[In Canada, interchange fees are] zero, and yet [banks] continue to issue the cards and they continue to use them," Durbin said.

Banks, though, are fighting back, warning lawmakers that adopting a Canadian-style approach would bring about dire consequences for consumers.

According to Pulse, an electronic funds transfer system, Senator Durbin??s proposal would result in the loss of 73 percent of interchange revenues for hundreds of banks across the United States.

Senator Durbin has also moved to another part of the Canadian system to which he would like the United States to pay more attention ?" credit and debit cards equipped with anti-fraud technology. Canada uses chip and pin technology.

Last month, Senator Durbin sent a sharply worded letter to Jamie Dimon, CEO of JPMorgan Chase & Co., criticizing the bank for "steering American cardholders toward fraud-prone [traditional cards] in contrast to Chase??s practice in Canada" where customers have access to superior chip and PIN-enabled products. Durbin called it an "inexcusable" situation.

This year??s NACS Global Forum takes place in Vancouver, Canada. In addition to debit card swipe fee practices, the Canadian market offers valuable insight into retail challenges occurring ?" or that could occur ?" around the world. For more information about the Global Forum or to attend visit nacsonline.com/globalforum.

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