Debit-fee reforms are working

Congress’s swipe-fee reforms haven’t caused the problems big banks predicted, according to the restaurant industry.

Scott DeFife, the Association’s executive vice president for policy and government affairs, says in “Shocker: Small Banks Are Prospering in Wake of Durbin Amendment,” an online op-ed published in Forbes March 26, that credit unions and community banks are booming as consumers look for alternatives to big banks.

Congress passed the Durbin Amendment in 2010 to limit debit-card swipe fees for merchants. The Durbin Amendment was aimed at ensuring that merchants pay “reasonable and proportional” swipe fees when guests pay by debit card. Rules issued by the Federal Reserve to implement the Durbin Amendment took effect last October, and have reduced debit-card swipe fees for many restaurants.

DeFife argues that the Durbin reforms are helping to make swipe fees more transparent, thus allowing smaller banks (who aren’t covered by the Durbin Amendment) to compete with bigger players who kept fees hidden from consumers.

“Swipe fees are hidden fees that shave retailers’ tiny profit margins even thinner, raise prices for consumers, and enrich the largest credit card banks (not to mention Visa and Mastercard) on the backs of the merchants,” DeFife notes.

The NRA’s case to improve the Federal Reserve rule on behalf of small-ticket merchants is also progressing.

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