Fed expected to lower bank debit card fees. Wait! But Visa/Mastercard want to raise credit card fees again!

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The Federal Reserve Board has announced  a rule-making expected to lower the amount big banks collect in debit card fee revenue.  According to Politico, a leading paper 0n Capitol Hill:

“The Federal Reserve is about to escalate the Washington holy war between banks and retailers. The Fed this afternoon is expected to propose a rule that could end up lowering the federal cap on debit card swipe fees – a move that would impact billions of dollars that banks collect and give financial relief to merchants who pay the charges.”

The proposed Fed rule is here.

The Fed set those rules in 2011 only after a bitter battle led to the passage of the so-called Durbin amendment during the Dodd-Frank Act, which limited  the amount of debit card “swipe fees” big banks could charge merchants.  The Dodd-Frank Act was passed to clean up the mess created when bank malfeasance wrecked the economy and led to the Great Recession. As we later explained in testimony to the Congress:

“We have long supported credit and debit interchange (or swipe) fee reform and the Durbin amendment, which made debit interchange markets fairer. All consumers pay more at the store and more at the pump because of unfair, nonnegotiable, nontransparent merchant interchange fees imposed by the card networks.”

Meanwhile, the fight over the fees collected on credit card fees has escalated. PIRG supports more reform of the anti-competitive fees. Both the already-regulated debit card fees and, as yet, unregulated credit card fees are controlled by the Visa-Mastercard duopoly. Senator Durbin leads a bi-partisan House-Senate coalition in support of the PIRG-backed Credit Card Competition Act.

Recently Senator Durbin and co-sponsor and Senator Dr. Roger Marshall (R-KS) sent a letter asking “the U.S. Department of Transportation (DOT) and the Consumer Financial Protection Bureau (CFPB) about the actions they are taking to protect consumers against unfair and deceptive practices in airlines’ frequent flyer and loyalty programs.”

The industry newspaper “Payments Dive” explains that:

“The proposed Credit Card Competition Act is drawing airline frequent flyer programs tied to credit cards into the fracas over whether the bill should be passed…The senators said the airlines that run those programs have teamed up with credit card issuers to market certain rewards for consumers using the cards, but then have changed their programs’ rules to shortchange the frequent flyer members.”

We fully expect Visa and Mastercard to raise swipe fees again, because they can, unless the bipartisan Credit Card Competition Act passes. Learn more about how they profit from the anti-competitive fees we all pay.


Ed Mierzwinski

Senior Director, Federal Consumer Program, PIRG

Ed oversees U.S. PIRG’s federal consumer program, helping to lead national efforts to improve consumer credit reporting laws, identity theft protections, product safety regulations and more. Ed is co-founder and continuing leader of the coalition, Americans For Financial Reform, which fought for the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, including as its centerpiece the Consumer Financial Protection Bureau. He was awarded the Consumer Federation of America's Esther Peterson Consumer Service Award in 2006, Privacy International's Brandeis Award in 2003, and numerous annual "Top Lobbyist" awards from The Hill and other outlets. Ed lives in Virginia, and on weekends he enjoys biking with friends on the many local bicycle trails.