Durbin, Welch Urge Fed to Follow Europe on Interchange Limits (July 30, 2013)
July 30, 2013
A pair of lawmakers is calling on the Federal Reserve to take into account interchange restrictions proposed by European regulators while it formulates its next biennial assessment of interchange fees in the U.S. In a letter to Federal Reserve Chairman Ben Bernanke last week, Sen. Dick Durbin (D-Ill.) and Rep. Peter Welch (D-Vt.) pointed to the European Commission’s recent proposal to cap fees that banks can charge to process debit and credit card payments, while prohibiting sellers from adding surcharges onto card sales.
“[R]egulators throughout the world have taken proactive steps to ensure competition, transparency and fairness during [the] shift from paper to electronic currency, but regulators in the United States have been slow to act and have fallen behind the global curve,” the lawmakers wrote. “We believe regulators in our country must act affirmatively to rein in abusive fees and practices in the electronic payments system, and we hope that the European Commission’s announcement serves as a wake-up call to action.”
The Durbin Amendment already caps debit interchange at 21 cents, plus 5 basis points of the transaction’s value for cards issued by banks with more than $10 billion in assets. But consumer advocates and retail groups have continued to push for lower limits and fewer exemptions for smaller banks. Earlier this year, the Fed declined to lower interchange limits in its second biennial report on the debit card market. The next report is due in 2015.
The EC’s proposal remains for now just that. To pass into law, the plan requires the approval of the European Parliament and the European Union member states. Under the proposed cap, interchange on EU credit card payments would be limited to 0.3 percent of the transaction value, while debit card sales would be capped at 0.2 percent.