Cap on debit card swipe fees survives Senate vote
The Senate left in place pending federal rules that will cap the fees charged by banks each time a consumer swipes a debit card, ending for now a fight that rekindled populist fervor against Wall Street.
But the attempt Wednesday to roll back the regulations and preserve the higher fees came within six votes of passage, ensuring that the long-running battle will continue.
Retailers lauded the outcome while one banking group, the Independent Community Bankers of America, said it was “extremely disappointed.”
The regulation, approved as part of last year’s Wall Street overhaul law, is scheduled to go into effect next month. The Federal Reserve would cap debit card swipe fees to 12 cents per transaction. Fees now average 44 cents, officials said.
Retailers largely support the new regulation, but banks and credit card companies have mostly opposed the limits on the amount they can collect on debit card transactions, which now exceed any other form of noncash payments. Swipe fees totaled about $16 billion in 2009.
The Senate needed 60 votes to pass legislation to halt the pending regulation. The measure, an amendment to a broader economic development bill in the Senate, fell short, with 54 senators voting to block the regulation and 45 voting against.
But the vote did not split along partisan lines. Instead, it pit one populist Democrat, Sen. Richard J. Durbin of Illinois, against another, Sen. Jon Tester of Montana, as each claimed to be fighting to protect consumers and small banks.
Tester proposed delaying the regulations to study the effect on smaller financial institutions and credit unions, particularly those in Montana, where he is up for reelection next year. Smaller institutions fear they will be unable to recoup the costs of handling transactions or that their cards will be shunned by retailers.
Tester said “big Wall Street banks” could handle the fee cap. “The Main Street community banks or credit unions are a different story,” he said in debate.
Durbin defended the limits he helped to draft as part of the Dodd-Frank financial reform law last year and said institutions with less than $10 billion in combined assets would be exempt and could continue collecting the higher swipe fees.
Durbin framed the pending rule as a victory for Main Street over Wall Street.
