Two U.S. House lawmakers say they will introduce a bill to repeal a Federal Reserve rule capping debit-card swipe fees.
Representatives Jason Chaffetz, a Utah Republican, and Bill Owens, a New York Democrat, plan to introduce a measure later today to repeal the rule required by the 2010 Dodd-Frank Act. The Fed on Oct. 1 implemented the rule, which limits fees that card networks charge merchants to 21 cents per transaction -- about half the average retailers have paid in the past.
The repeal legislation “fixes the disastrous consequences of this bill,” Chaffetz said today in a statement. “Congress must repeal this egregious provision that increases the costs of doing business on everyone.”
The caps may cut as much as $8 billion in revenue from the largest U.S. banks, according to data compiled by Bloomberg Government. In response, Bank of America Corp. (BAC), JPMorgan Chase & Co. (JPM), Wells Fargo & Co. (WFC) and SunTrust Banks Inc. (STI) have been rolling out new charges for debit-card users.
Payment networks like Visa Inc. (V) are forecasting slower growth under the new rules, which give retailers a choice of at least two unaffiliated networks when they process transactions. That change may create more competition for the networks, which had been able to negotiate exclusive deals.
“For members of Congress today to do the bidding of the country’s biggest banks and attempt to repeal these reforms is an affront to merchants and their customers,” Mallory Duncan, the chairman of the Merchants Payments Coalition and general counsel for the National Retail Federation, said today in a statement.
Senator Richard Durbin, an Illinois Democrat, pushed for the inclusion of the swipe-card rules in the financial regulation overhaul. The fees, often the second-highest cost of doing business behind labor for retailers, were at the center of a fight in Congress this year as senators considered a bill to delay the rules. The measure was defeated.
“Efforts to kill swipe fee reform have been tried and have failed in the Senate, where there is no interest in rewarding Bank of America’s bad behavior with a multi-billion dollar payout,” Max Gleischman, Durbin’s spokesman, said in an e-mail.
Representative Shelley Moore Capito, a West Virginia Republican who serves on the Financial Services Committee, introduced a delay measure in the House in March. House lawmakers planned to wait and see if the Senate passed the measure before moving their own, Representative Spencer Bachus, the chairman of the Financial Services panel, said at the time.
“The House would always have passed it,” Representative Barney Frank, a Massachusetts Democrat, said last week in an interview. “They just didn’t want to get into the fight.”
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