The payment card interchange system in our country was working well, providing tremendous benefit to American consumers and merchants of all sizes and types until the Durbin Amendment to the Dodd-Frank Act imposed price controls on debit card interchange. For the first time in the industry’s history, the government is effectively setting the price in a business-to-business transaction.
- ICBA strongly opposes efforts to have the government set or limit payment card interchange or other fees, mandate interchange fee disclosures to consumers, or create antitrust exemptions allowing merchants to “negotiate” or “operate” in anti-competitive and collusive ways to the detriment of community banks and their customers. Government intervention should not provide one payment card type advantages over other payment card types.
- ICBA supports payment card network rule modifications that would re-balance authorization, clearing and settlement, and guarantee provisions; and compensate issuers based on the authorization method selected by cardholders.
The verdict is still out as to whether the small debit card issuer exemption from the interchange fee cap is indeed shielding community banks from the negative impact of government price fixing. ICBA is working to ascertain the impact of new and evolving marketplace dynamics (network pricing, network routing rules and issuer, network and merchant implementation) on this exemption.
Despite a settlement between merchants, payment networks and large banks in their class-action case, merchants continue to want to pay less for the benefits received by accepting payment cards. Merchants are vigorously pursuing various legislative strategies to further shift their payment card interchange costs to consumers, and are likely to continue to push Congress to regulate credit card interchange fees and further weaken payment network rules in the future. If merchant efforts are successful, community banks and their customers will pay more to provide merchants, especially larger ones, with those benefits. Retailers like Wal-Mart should not be given an even greater ability to squeeze local small businesses on margin, nor should community bank customers be forced to subsidize that anti-competitive behavior.
ICBA remains actively engaged in the regulatory and legislative process and continues to work to prevent large retailers from further damaging the electronic payments system.
Staff Contact: Viveca Ware