On June 10, 2010, Senator Durbin provided a floor statement on his “swipe fee” amendment that would regulate debit card interchange fees. The interchange amendment is facing increasing opposition from a number of parties.
In his floor statement (which you can watch below, thanks to C-Span), Senator Durbin provides his view of the amendment:
My amendment requires that debit card fees be reasonable, and it cleans up some of the worst abuses. The amendment was adopted with 64 Senators voting in favor, including 17 Republicans. It was a major victory for small business and merchants and consumers across America. It will help small businesses grow and create jobs, which we definitely need in this economy, and it will put us back on sound economic footing. It will help American families, each of whom pays an estimated $427 a year, to subsidize this $50 billion interchange fee system for Visa and MasterCard.
Senator Durbin addresses many of the arguments made by Visa, MasterCard and other opponents to the interchange rules. Some of Senator Durbin’s arguments seem hard to support. For example, in response to the argument that the amendment will make it difficult to cover the costs associated with fraud risk, Durbin states:
Visa, MasterCard, and the banks have also been blocking the introduction of fraud-proof card technology in the United States, again because they want to keep interchange rates high. For example, many countries have chip and PIN cards where a card has a microchip that can only be activated by the use of a PIN number. The banks and card companies in this country have stifled that technology.
When debit fraud does happen today, the big banks usually try to charge back the fraud loss to the merchants on the grounds that the merchants somehow violated Visa’s and MasterCard’s operating rules.
Haven’t the Card Associations been pushing for smart card technology for years? And hasn’t it been the merchants who have resisted adoption of this technology?
The battle wages on…
Watch the full floor statement below: