The Senate bill to study and delay the regulation of electronic debit transactions is “a polite way of killing consumer-friendly swipe-fee reform,” says Rep. Peter Welch, D-Vt.
In the 20 years since debit cards were introduced, the fees to swipe cards have steadily increased. Swipe fees add 1-3 percent to the price of items, adding up to approximately $230 in extra expenses a year for individuals, Welch said in an opinion piece in Roll Call.
Last year, Congress approved a law that would set a limit to the swipe fees, but a bill introduced by Sen. Jon Tester, D-Mont., and endorsed by the credit companies will delay and eventually kill debit card reform, Welch wrote.
“A lobbying battle is under way in Washington as card companies and big banks seek to ‘delay’ (read: kill) these important consumer protections,” Welch wrote. “If you ride the Metro or turn on a television, you can’t miss the ads making erroneous claims about debit card swipe-fee reforms.
“And who’s behind these ads? Not surprisingly, it’s Visa, Master Card and the big banks,” he added.
According to Welch, over the years financial institutions have been able to charge the highest fees in the world, yielding the 10 largest banks about $8 billion a year from debit card swipe fees.
Card companies say the swipe-fee reform passed would hurt small banks and credit unions and would ultimately not help consumers because merchants would not pass the savings on to customers.
“That specious argument effectively translates to: ‘We’ve been doing such a good job ripping off consumers, we can’t let someone else do it!’” Welch wrote.
The Senate is expected to vote on Tester's bill on Wednesday.