It’s only been a day since U.S. Rep. Jeb Hensarling (R-TX), chairman of the House Financial Services Committee, formally renewed his efforts to repeal debit swipe fee reform, but industries on both sides of the issue are ready to rumble.
And the heat is on since Hensarling also set a committee hearing for April 26 to talk about his plans under the updated discussion draft released Wednesday of his Financial CHOICE Act, which would end the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, among other things.
“Republicans are eager to work with the president to end and replace the Dodd-Frank mistake,” Hensarling said in a statement Wednesday. “We want real consumer protections that will give you more choices.”
The revised proposal again pits big stakeholders against smaller ones, such as the credit card and banking industry, which are pro-reform, against the convenience store industry, which has benefited from the debit reforms that are in place under 2010’s Dodd-Frank.
In fact, according to the Association for Convenience and Fuel Retailing, known as NACS, the reforms commonly called the Durbin amendment have “injected competition into the debit swipe fee market by limiting the fees that Visa and MasterCard can fix on behalf of the largest banks.”
The reforms, NACS said, are designed to incentivize those banks to compete instead of accepting the price-fixed fees by Visa and MasterCard.
The reforms also restored routing competition by requiring there be two unaffiliated routing network options on a debit card. This prevents Visa and MasterCard from blocking competitors from being on debit cards, NACS said in a statement Thursday.
“Repeal of debit reform would result in even higher swipe fees for merchants and increase the prices consumers pay for goods and services. For this reason, NACS, along with other members of the Merchants Payments Coalition, are strongly advocating for the repeal provision to be taken out of the Financial Choice Act and will oppose that bill as long as it includes repeal,” the statement said.
Generally, the Financial CHOICE Act would reform the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency and the National Credit Union Administration, among other reforms.
The bill would eliminate Title II of the Dodd-Frank Act and any federal law related to it, effectively ending the so-called “too-big-to-fail” bank bailouts.
Specifically, the Financial CHOICE Act portends that the Dodd-Frank provisions “make America less prosperous, less stable, and less free,” according to language in the 593-page discussion draft.
The Electronic Payments Coalition (EPC), a coalition of payments industry stakeholders, such as credit unions, community banks, trade associations, payment card networks and banks, said such a repeal “shows Congress is ready to take action on a broken promise to consumers.”
“Consumers, credit unions and community banks need relief from Dodd-Frank’s onerous regulations, and that starts by repealing the price controls that generated a windfall for big box retailers but failed to produce meaningful savings for their customers,” said Molly Wilkinson, EPC’s executive director.
“It’s time to stop the handouts to big box retailers. Repealing the Durbin amendment is the right move for consumers, small businesses and community financial institutions,” Wilkinson said in a statement on Wednesday.
She said that even though big box retailers promised to pass along savings to consumers when the Durbin amendment passed, prices weren’t lowered and now “both consumers and small businesses are suffering under the weight of these broken promises.”
Hensarling introduced similar legislation during the last session of Congress, but the proposal languished in the House Financial Services Committee and never made it to a full vote in the House of Representatives.