WASHINGTON -- The Senate this week voted to go ahead with a plan to limit the fees that merchants pay banks to process debit card purchases.
An amendment introduced by Sen. John Tester (D-MT) that would have delayed regulations designed to slash the fees, commonly called swipe fees, to 12¢ a purchase from the present average of about 44¢ failed to pass. The rule was included in last year's financial regulatory overhaul and is slated to take effect July 21.
The debit-card rules were a major part of the Dodd-Frank financial regulation law passed last year, and the Senate vote was the first major challenge to the new law.
The $16 billion issue was the subject of intense lobbying, and Tester's proposition was seen as the best chance for revisiting the matter before some fee limits kicked in.
Although 54 senators voted in favor of the delay, the measure, which was also sponsored by Sen. Bob Corker (R-TN), did not garner the 60 votes that were required for it to pass under Senate rules. Forty-five senators voted against the amendment.
The debit card measure, sponsored by Sen. Dick Durbin, an Illinois Democrat, passed last year by a 2-1 margin after little debate and no hearings.
Banks, which collect the fees and pass some of that revenue on to the card networks, say the pending rules don't consider enough of their costs. Big banks maintain they will have to shift costs to customers with measures like charging for debit card use or eliminating debit rewards programs. Small banks and credit unions say that the limits could hamper their ability to serve their customers by reducing revenue, and even lead to shutdowns.
On the other side of the fight are retailers, who claim fees limit business expansion and say savings would be passed on to consumers.
Tester's proposal would have delayed the rule for a year and ordered the Federal Reserve and three other agencies to study whether the proposal is fair -- and rewrite it if at least two agencies decide it is not.
Durbin said that a delay of the new debit rules would have kept fees at current levels and given banks "a windfall of profit that they do not deserve."
The National Automatic Merchandising Association recommend that its members urge their Senators to resist the amendment.