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Repealing Debit Swipe-Fee Reform Would Increase Costs to Consumers

The National Restaurant Association today issued the following statement opposing Chairman Jeb Hensarling’s (R-Texas) proposal to repeal debit swipe-fee reform:

“It’s disappointing that Chairman Hensarling continues to stand with big banks and card companies over Main Street businesses,” said Laura Chadwick, Director of Commerce and Entrepreneurship for the National Restaurant Association. “Debit swipe-fee reform injected a degree of competition, transparency and fairness where there was absolutely none before. Despite what the big banks and card companies would have you believe, this much-needed reform has helped keep costs low for consumers. We urge Members of Congress to stand with Main Street businesses over big banks and card companies.”

The facts on debit swipe-fee reform:

  • Swipe-fee reforms ended price fixing by bringing competition and transparency to debit-card processing costs.
  • Small banks and credit unions are not affected by the debit swipe-fee reforms. Financial institutions with less than $10 billion in assets are exempt from the law. Fewer than 2% of banks are affected.
  • A study by noted economist Robert Shapiro found that debit swipe-fee reforms saved consumers $5.8 billion in lower costs.
  • Interchange, or “swipe,” costs represent one of a restaurant’s highest costs even with these reforms in place. Repealing these reforms would be devastating to small and medium-sized restaurants.

“Given the ongoing and rough transition to EMV or chip cards and the corresponding explosion in chargebacks for restaurants, removing limits on debit swipe fees is a step in the wrong direction for consumers and restaurants alike. Banks and card brands have long said that high interchange rates are needed to account for the vast amount of counterfeit card fraud in the payment card system. Since the EMV liability shift in October 2015, restaurants along with all other merchants are now bearing the cost of this fraud instead of banks.

“It’s no surprise the big banks and card companies continue to cry foul over debit swipe fee reform – it injected a degree of competition, transparency and fairness where there was absolutely none before,” said Laura Chadwick, Director of Commerce and Entrepreneurship for the National Restaurant Association. “Despite what the big banks and card companies would have you believe, hard-fought debit swipe fee reform has helped keep costs low for consumers. It’s unfortunate that Chairman Neugebauer has chosen big banks and card companies over Main Street businesses.”

“Without debit swipe fee reform, banks and card brands will have their cake and eat it too: no liability for counterfeit fraud and an unlimited ability to charge whatever they please for swipe fees — all to the detriment of restaurant consumers and a free market economy.”

Author: MRA
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