The Merchant Payments Coalition (MPC) during a Feb. 23 meeting with the Federal Reserve Board asserted that the Durbin Amendment of the Dodd-Frank financial overhaul bill addresses market failures in the debit industry.
The coalition represents more than 29 national and 80 state trade associations that work on behalf of 2.7 million stores and approximately 50 million employees. During the meeting, the coalition argued that the Fed’s proposal “would restore competition in the debit card market, as well as provide necessary relief on the level of interchange fees,” according to a Fed release.
The coalition also stressed their belief that small banks would not be harmed by the Fed’s proposal.
“The suggestion that merchants will discriminate against smaller banks, because they will receive higher interchange is belied by the fact that the networks’ Honor All Cards rules – which Congress did not alter in the statute – require merchants to accept all issuers’ cards without discrimination… Any attempt to reject exempt cards would violate those rules and risk fines of a magnitude that could sink some merchant businesses,” wrote the MPC in submission to the Federal Reserve.
The MPC advocated that merchants’ interchange fee savings would result in lower prices and other benefits for consumers, noting that the Australian Reserve Bank saw a similar scenario play out after financial regulations were enacted in the country. The coalition also urged the board to enact the Fed’s debit proposal without delay.
“The consequences of inaction are clear; the dominant networks (and their banks) will continue to impose supracompetitive interchange fees on all merchants – more than $1 billion per month of fees that are ultimately borne by consumers,” stated the MPC.
Click here to read the MPC’s complete submission to the Federal Reserve.
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