NEW YORK — Retail trade groups claimed victory in halting a measure in the Senate that would have postponed financial reform legislation slashing debit card interchange fees charged to retailers.
The Senate on Wednesday voted on S. 575, an amendment by Sens. Jon Tester (D., Mont.) and Bob Corker (R., Tenn.), that proposed to delay by a year swipe fee reform passed by Congress last year as part of its financial regulatory overhaul. The measure won a 54-45 majority but fell six votes short of the 60 needed for approval.
Both retailers and shoppers have reason to applaud the defeat of the legislation, according to the National Association of Chain Drug Stores.
"Today’s vote resulted in a huge victory for retailers and consumers," NACDS president and chief executive officer Steve Anderson said in a statement. "Retailers and consumers have the most to lose without swipe fee reform, and we are pleased that implementation of that reform can continue without further delay."
Debit card swipe fees, or interchange fees, have more than tripled over the last decade, costing retailers about $50 billion a year in added costs and hiking prices for consumers by nearly $500 a year per household, NACDS said.
Last year, President Barack Obama has signed into law a provision — the so-called Durbin amendment, authored by Sen. Dick Durbin (D., Ill.) — that required the Federal Reserve to implement swipe fee reform that is "reasonable and proportional" to the costs incurred by banks and credit card associations to process these transactions. The Fed is set to implement the swipe fee reform in July.
The law aims to lower debit card swipe fees by an estimated 70%, which would save retailers an estimated $1 billion a month — savings could be passed on to consumers as lower prices, rebates and other incentives.
"FMI applauds the 45 senators who voted to support their neighborhood grocery stores and their customers today. There is no doubt in my mind that customers will see savings returned to their pockets once this rule is finalized," stated Leslie Sarasin, president and chief executive officer of the Food Marketing Institute (FMI).
The issue also is key for small businesses, Sarasin noted. "Since 2008, more than 1 million businesses have failed costing 3.6 million jobs, and many report the growth of swipe fees as a strong contributor to their demise," she commented, adding, "The ball is now in the Federal Reserve’s court to publish a final rule and move toward the required July 21 implementation deadline."
Sandy Kennedy, president of the Retail Industry Leaders Association (RILA), remarked earlier this week that the interchange fee reforms "will fix the broken debit market" when they take effect next month.
"These bipartisan reforms will bring meaningful relief to millions of merchants and consumers at this critical time," Kennedy stated after the Senate vote. "With this distraction now behind us, retailers await the Federal Reserve’s final rules so they can begin implementing these reforms and saving consumers money."
According to the National Retail Federation (NRF), swipe fee reform stands to save the industry about $14 billion a year, which retailers plan to pass along to customers through discounts or other benefits.
“This is a landmark victory for American consumers that will give them the break from skyrocketing swipe fees that they have been seeking for years," NRF president and CEO Matthew Shay commented after the Senate rejected the Tester-Corker amendment.
"With the economy still trying to gain momentum and consumers facing skyrocketing costs for necessities like food and fuel, this badly needed reform will help ensure our nation’s economic recovery. It will prevent more than a billion dollars a month from being pocketed by big banks and, in turn, allow retailers to hold down prices for consumers," Shay explained. "Congress came to the right conclusion last year — hidden swipe fees charged by big banks have driven up prices far too much for far too long. The National Retail Federation and America’s retail merchants commend the Senate for standing by last year’s vote and for voting on the side of American consumers."
NACDS noted that it generated grassroots support against the Tester-Corker amendment via its RxImpact advocacy program.
"NACDS has consistently opposed efforts to prevent the implementation of swipe fee reform, engaging with key lawmakers and activating its robust grassroots efforts to prevent this delay," stated Anderson. "We thank Sen. Dick Durbin for his leadership in bringing this issue to the forefront of Congress and working diligently to prevent a delay to the pro-retailer and pro-consumer swipe fee reform."
