Senate Passes Financial Reform

The convenience and petroleum retailing industry are now celebrating the end of a nearly 10-year battle to rein in interchange fees. Yesterday, July 15, the U.S. Senate voted 60 to 39 in support of the financial reform package known as the Dodd-Frank Bill that contains the crucial interchange amendment, NACS reported.

Thursday’s vote was the last hurdle in the campaign to get the bill enacted into law, given that President Obama has said he plans to sign the legislation once it clears Congress.

The House of Representatives passed the legislation on June 30.

The interchange amendment, also known as the Durbin Amendment after Sen. Richard Durbin (D-IL), who created it, directs the Federal Reserve to issue rules to ensure that debit card interchange fees, also known as swipe fees, are reasonable and proportional to the processing costs incurred.

Visa and MasterCard currently charge debit swipe fees of around 1-2% of the transaction amount – among the highest rates in the industrialized world.

Swipe fees have been the convenience and petroleum retailing industry’s top pain point and second largest expense item – behind only labor costs – for a number of years.

“Today’s vote demonstrates the value of retailers engaging with their elected officials,” said NACS President and CEO Hank Armour. “This is why NACS exists – to help bring together the industry to amplify its voice and make a difference on issues important to all of us. Last year we said that 2010 will be the year that we achieve meaningful interchange reform if we can combine the power of skillful lobbying with dramatic grassroots activity. Through consistent engagement with Congress, combined with massive consumer petition campaigns, we have clearly seen that great things are possible when our industry is engaged.”

The vote to pass the financial reform package followed intense lobbying by the banking industry in opposition to the Durbin Amendment.

“From the phone calls and letters that flooded congressional offices in support of this legislation to the record-setting 5.4 million customer signatures that our industry collected demanding reform, we have made our voices heard and Congress has listened,” added Armour.

“This victory shows what we can accomplish as an industry working together,” said NACS Chairman Jay Ricker, chairman of Anderson, Ind.-based Ricker Oil Co. “The power of grassroots advocacy is immense, and the possibilities are endless when we fight for what is right.”

The legislation includes a provision directing the Federal Reserve to issue rules preventing card networks from requiring that their debit cards can only be used on one debit card network – ensuring that retailers will have the choice of at least two networks upon which to run debit transactions. In addition, the amendment would allow merchants to choose to decline credit cards for small dollar purchases because swipe fees often exceed profits on such sales. The amendment also clarifies that retailers can offer discounts to consumers who choose to pay with cash, check or debit card.

“At its core, this legislation simply introduces competition to a market that has not had any,” said NACS Vice Chairman of Government Relations Tom Robinson,  president of Santa Clara, Calif.-based Robinson Oil Corp. “Both consumers and retailers will see benefits as debit card fees will be aligned more closely with the cost of checks, as opposed to credit cards.”

SOURCE National Association of Convenience Stores (NACS)

 

 

 

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