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U.S. Senate Approves Durbin Debit Card Interchange Fee Proposal

Posted On: 5/14/2010

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Restoring American Financial Stability Act, interchange fees, interchange rate, credit card fees, swipe fees, Dick Durbin, Christopher Dodd, Government Accountability Office, debit or credit, vending, vending machine, cashless vending

WASHINGTON -- The fight over interchange fees associated with cashless purchases -- often called swipe fees -- has entered a new phase. An amendment to financial reform legislation now under consideration by the Senate has been adopted, with bipartisan support.

Proposed by Sen. Dick Durbin (D-IL), Amendment 3989 to the Restoring American Financial Stability Act of 2010 gives oversight responsibility for debit card interchange fees to the Federal Reserve. It incorporates recommendations that Durbin has made to regulate the fees levied by banks on debit card transactions.

According to both opponents and proponents of Durbin's amendment, it would take a substantial bite out of the more than $40 billion in fees collected by card-issuing banks if passed into law.

The amendment would allow merchants to offer discounts to consumers who pay with cash, debit or a particular card network; permit retailers to set minimum and maximum purchase limits -- something major card issuers don't presently allow; and authorize the Federal Reserve to regulate the interchange fees charged for debit card transactions.

Predictably, the amendments were hailed by small business owners, but condemned by banks and card associations.

Last November, the Government Accountability Office published a report on credit card interchange fees, concluding that the rates have imposed heavy costs on merchants. While merchants would see lower fees and thus improve their bottom lines, consumers might incur higher credit card costs, the GAO observed. It's online at

Sen. Durbin's office has issued a fact sheet on Amendment 3989, describing what it does, why he believes it is needed and what it does not do. 

"The Durbin amendment would not have the Federal reserve set interchange prices," the fact sheet explains. "Instead, the Fed would oversee the debit interchange fees set by card networks to assure that they are 'reasonable and proportional' to cost. This is the same 'reasonable and proportional' standard that Congress directed the Fed to use to oversee consumer credit card fees in the 2009 CARD Act." (Last year, Congress passed and the President signed the Credit Card Accountability, Responsibility and Disclosure Act -- known as CARD -- which deals with the duties that card issuers owe consumer cardholders).

The fact sheet on the amendment is online at