Senate to Vote Today on Swipe-Fee Reform Delay

June 8, 2011

The U.S. Senate is expected to vote today on an amendment that would delay the implementation of the swipe-free reform mandated by the NSBA-supported amendment to the Restoring American Financial Stability Act (S. 3217), introduced by Sen. Whip Dick Durbin (D-Ill.).
The Durbin amendment required the U.S. Federal Reserve (Fed) to propose new rules aimed at ensuring that the swipe fees charged for debit-card transactions are “reasonable and proportional” to the actual costs incurred by the issuer in processing the transaction.

Sens. Jon Tester (D-Mont.) and Bob Corker (R-Tenn.) are introducing an amendment that would effectively kill the these reforms. It would delay the swipe-fee provisions for one year and mandate a “six-month study focused on: all costs, impact on consumers, effectiveness of small-issuer exemption, and impact of routing and exclusivity.”

It requires the Fed, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and National Credit Union Administration to examine if the reforms failed to consider the fixed and incremental costs issuers face for processing debit transaction and if the Fed rule would negatively impact debit-card consumers or small debit-card issuers. The Fed would be required to rewrite its rule within six months—“taking into account all costs”—if two of the four reviewers reached any of those conclusions.

NSBA is ardently opposed to any delay in the implementation of the Fed rule. Efforts to delay the implementation clearly are aimed at preventing the rules from going into effect rather than illuminating the issue. The swipe-fee system already has been the subject of three separate U.S. Government Accountability Office reports and nine Congressional hearings.

While Tester and Corker are not alone in their support for this amendment, they are expected to face an uphill battle in securing the 60 votes they need to secure its passage. This is not surprising, given the nature of the amendment and the press it is receiving in their home districts. A recent headline in both the Billings Gazette and the Helena Independent Record read: “Tester Sticks With Banks on Debit Card Swipe-Fee Issue.”

Additionally, more than 300 national and state trade associations, including NSBA, signed a letter opposing the Tester amendment, citing the harm it will do to Main Street merchants and consumers.

The Durbin amendment and the proposed Fed rule are beneficial to America’s small businesses. Further delay, equivocation, and another big-bank handout are not. This loud-and-clear message must be sent to the Senate.

Please take a moment NOW to urge your senators to oppose the Tester amendment.