A group of more than 400 retailers have entered the fray over the so-called “Durbin Amendment,” calling on House Republicans to abandon efforts to repeal the cap on debit card interchange fees.
The retailers, ranging from A&R Super Markets to Zuni Shopping Center, argue that the amendment to Dodd-Frank provided significant protection to businesses from the anti-market practices employed by global credit and debit card brands.
The cap was intended to help merchants and consumers as well as lower prices for retail customers. But it hasn’t worked that way, according to credit unions, banks and other opponents, who said merchants failed to pass on savings to consumers.
Led by House Financial Services Chairman Jeb Hensarling (R-Texas), House Republicans have introduced legislation to repeal the Durbin Amendment. Hensarling also included a repeal in his comprehensive overhaul of the financial regulatory regime.
On the other hand, Sen. Richard Durbin (D-Ill.), the sponsor of the Dodd-Frank amendment has said that he would vigorously fight any effort to repeal it.
Since the House and Senate are expected to be in session for a limited amount of time through the end of the year, it is unlikely that such controversial legislation would be enacted this year. But the jockeying sets up a likely legislative battle for 2017.
Even then, Durbin’s opposition could be a significant roadblock in the legislative effort.
“Credit and debit card acceptance is a prime example of a nonfunctioning marketplace,” the merchants said in a letter to Hensarling and Rep. Randy Neugebauer (R-Texas), chairman of the Financial Institutions Subcommittee. Retailers and other businesses must accept electronic payments if they are to remain competitive, the merchants said. “This dynamic has enabled global card brands to leverage a business model whereby they can change the rules of card acceptance at any moment,” they said in the letter.
However, banks and credit union groups painted a different picture in letters to the House Republicans earlier this year. They said the Durbin amendment introduced price-fixing to a functional and competitive system. They said the amendment was supposed to exclude small issuers from interchange fee ceiling restrictions, but Dodd-Frank failed to include an exemption from costly network routing and exclusivity provisions.
