Passage of the Financial Choice Act would have devastating effects on small business owners.
The House Financial Services Committee chairman, Jeb Hensarling, recently announced his intention to mark up the Financial Choice Act. This Act includes the provision to repeal the debit swipe fee reform. In response to Hensarling’s announcement, Lyle Beckwith, senior vice president of government relations of the National Association of Convenience Stores (NACS), released the following statement:
“NACS is deeply disappointed that Rep. Hensarling will try to repeal debit swipe fee reform. Repeal would allow the credit card Goliaths to resume price-fixing of debit-card fees and block smaller card networks from competing with them for business.
“Even with reform, the dominance of the Visa-MasterCard duopoly means retailers and consumers in the U.S. pay the highest swipe fees in the world—up to seven or eight times European levels. Without the vital protections of debit reform and the small measure of competition it has introduced to the market, consumers would face higher prices and smaller merchants would face even greater burdens—especially convenience store owners. Higher swipe fees, which on average are the fastest-growing expense and second-largest operating cost for retailers, cost American consumers tens of billions of dollars every year.
“We strongly urge Congress to put the interests of merchants and consumers ahead of the credit card giants by voting against the Financial Choice Act.”
Six years ago, debit reform passed (with bipartisan support in the Senate) as an amendment to the Dodd-Frank Wall Street Reform package. The reform stated that centrally price-fixed swipe fees on debit transactions had to be “reasonable and proportional” to the cost of processing the transaction. Importantly, the reform ensured that competition among debit networks continued.
Debit swipe fee reform has helped both merchants and consumers alike. Merchants have seen transparency for the first time when a customer swipes a debit card. And according to an economic report released by the Merchants Payments Coalition, cutting debit fees put $5.8 billion in consumers’ hands through lower prices and created 37,500 new jobs annually.