On Thursday, the National Retail Federation praised remarks by Federal Reserve Chairman Ben Bernanke that there is no need to delay reforming “swipe” fees charged by banks for processing debit card transactions.
Speaking before the Senate Banking Committee, Bernanke said provisions under the “Wall Street Reform Bill,” introduced last year, requiring swipe fees to be “reasonable” and “proportional” do not require additional information.
“We have plenty of information,” Bernanke said. “That is not a problem.”
The bill’s regulations, which would reduce swipe fees by about 70 percent, are scheduled to take effect July 21. However, banks are supporting a bill by Senator Jon Tester (D-Montana) to delay the reform by two years, allowing time for further study.
However, the regulations have already gone through seven congressional hearings, and two Government Accountability Office reports. Sheila Bair, Chair of the Federal Deposit Insurance Corporation, said there’s no need for alarm.
“Initial analysis is that there shouldn’t be an impact on safety and soundness,” she said during the same hearing.
The Fed’s new regulations would lower debit card swipe fees from their current level–1 to 2 percent of all transactions–to a flat fee that can never be more than 12 cents. Currently, about $20 billion is charged in swipe fees every year. The Fed’s new regulations are estimated to reduce swipe fees by $1.2 billion each month.
Retailers are already preparing special deals for debit card users once reforms are implemented–deals which would have to be scrapped if the reform package is delayed.
“Chairman Bernanke has made it clear not once but twice now that there is no need to delay swipe fee reform and the savings it will bring to American consumers this summer,” said Mallory Duncan, senior vice president and general counsel for the National Retail Federation. “The big banks claim they want a study, but the truth is that they want to kill reform. The Federal Reserve and the merchant community are committed to carrying out Congress’ intent to bring these fees under control. Big banks should not be allowed to take these savings away from retailers and their customers.”