Washington battle over retailer swipe fees which could save each family $427 a year.

[one...two...tree 2,762]

For the past year, a wide and expensive lobbying fight in Washington has pitted Wall Street banks against big retailers, and fattened the wallets of lobbyists up and down K Street. The final battle (for now, anyhow) will take place on the Senate floor this afternoon when an amendment by Sen. Jon Tester of Montana comes up for a vote.

This fierce debate is over the "swipe fees" that banks charge retailers when a customer uses a debit or credit card at their store. During the Dodd-Frank financial reform debate last year, Sen. ####### Durbin successfully passed a bill requiring the Federal Reserve to limit these fees, and the Fed's rules go into effect on July 21. Tester's amendment would delay that implementation by 12 months.

There's a lot at stake for Wall Street banks in this fight—they rake in $1.35 billion in swipe fees every month, according to The Nilson Report. More than half goes to ten large megabanks that include Chase, Wells Fargo, and Bank of America.

America has the highest average swipe fees in the world, at 44 cents per transaction. Durbin's bill required the Federal Reserve to come up with a swipe-fee cap based on what it actually costs banks to perform those transactions. The Fed studied that question and came back with a pretty amazing finding in December: fair "swipe fees" should average about 12 cents, not 44. It will enforce that cap next month if Tester's amendment fails.

With $16 billion per year in swipe fees about to be reduced by nearly three-quarters, big banks have gone all-out to stop the changes. In just the first quarter of this year, the bank-funded Electronic Payments Coalition has given $2 million to members of Congress in an attempt to derail the bill. Then there's the money they've spent hiring lobbyists—118 ex-government officials and staffers alone—along with flashy media campaigns.

Naturally, however, retailers are just as determined to stop Tester's amendment, so the billions they pay each year in swipe fees can be dramatically reduced. Major retailers like Walmart, Home Depot, Target and others have spent millions of their own in contributions, and hired 124 former government officials and staffers to fight their battle.

On the Senate floor late yesterday, Durbin joked that his amendment is actually a "full employment" bill for Washington. "A friend of mine who is a lobbyist downtown in Washington said, 'Durbin, praise the Lord. Come up with some more ideas. This is a full employment amendment. Everybody who is a lobbyist in Washington is working on this amendment. We just love you to pieces,'" he said.

Sen. Lindsey Graham told the Huffington Post that "Everybody and their grandmother's lobbying on this" and added it was in the "top ten" of brutal and well-funded lobbying battles that he's seen.

There's a lot of perverse humor in Durbin's "full employment" joke that he may not have intended, however. Unemployment nationally is over 9 percent, and 3.5 million homes have been foreclosed on since the start of the housing crisis. Full emplyment is a distant fantasy for most parts of the country.

Even rosy estimates by retailers say swipe fee reductions will only save households about $427 annually—hardly a life-saving amount, but yet this is the lobbying battle consuming Washington.

It appears the banks will lose this fight. Tester needs 60 votes to pass his bill delaying the swipe fees, and various news reports indicate he probably doesn't have it. Moreover, the larger bill that his amendment is attached to, expanding funding for the Public Works and Economic Development Administration, will almost certainly die in the House anyhow. So Wall Street banks can actually lose Washington battles—but apparently only when their adversary is other big businesses.

http://www.thenation...vs-big-business

[Mr. Big Dog 10,747]

So the NRF is suggesting that the money they would save on swipe fees will make it back to the pockets of the consumer in actual savings at the store? Sorry but I ain't buying that. The likelier scenario is that retailers will improve their bottom line with these saves and banks will find other fees to charge the consumer to offset their loss in swipe fees.

[damulag 26]

So the NRF is suggesting that the money they would save on swipe fees will make it back to the pockets of the consumer in actual savings at the store? Sorry but I ain't buying that. The likelier scenario is that retailers will improve their bottom line with these saves and banks will find other fees to charge the consumer to offset their loss in swipe fees.

Amen,

[one...two...tree 2,762]

So the NRF is suggesting that the money they would save on swipe fees will make it back to the pockets of the consumer in actual savings at the store? Sorry but I ain't buying that. The likelier scenario is that retailers will improve their bottom line with these saves and banks will find other fees to charge the consumer to offset their loss in swipe fees.

Why is it that the banks are making more in profits from transaction fees than from other more traditional methods? Also, why is it that U.S. banks charge more for these transactions than in Europe? Secondly, the retail market is highly competitive and retailers are constantly in price wars to beat the competition. That means, if they can shave off the price of goods even more to attract consumers, they will, IMO.

[slim 1,531]

This ranks right up there with having Major League Baseball players testify about performance enhancing drugs. Because, that's what congress is supposed to do, right?

[Mr. Big Dog 10,747]

Why is it that the banks are making more in profits from transaction fees than from other more traditional methods? Also, why is it that U.S. banks charge more for these transactions than in Europe? Secondly, the retail market is highly competitive and retailers are constantly in price wars to beat the competition. That means, if they can shave off the price of goods even more to attract consumers, they will, IMO.

Grocery stores - all but three of them - here in the area bombard me weekly with offers like these:

$5.00 off your $50.00 purchase

$5.00 off your $30.00 purchase

Spend $50.00 receive a $10.00 gift card

So they can give me up to 20% worth a discount on my shopping but struggle with a $0.44 fee when I swipe my card at the end of the transaction (which earns me yet another 2% - 5% off the purchase I made). If swipe fees are so rouinous, then why doesn't the retailer give me a break when I pay in cash? Do you really mean to tell me that $0.32 worth a difference in the swipe fee will make it back into my pocket? I've got some bridge to sell, you know.

Edited June 8, 2011 by Mr. Big Dog

[scandal 951]

Why is it that the banks are making more in profits from transaction fees than from other more traditional methods? Also, why is it that U.S. banks charge more for these transactions than in Europe? Secondly Thirdly, the retail market is highly competitive and retailers are constantly in price wars to beat the competition. That means, if they can shave off the price of goods even more to attract consumers, they will, IMO.

That was your third, not your second point.

I don't use a debit card. I only use credit cards which give me full fraud protection, generous rewards points program, and no-interest or fees provided I pay my statement balance in full each month which I always do.

[one...two...tree 2,762]

That was your third, not your second point.

See what happens when you have two fingers?

[SuperDuper! 230]

Use cash instead and avoid the swipe.

Itz called swipe for a reason, as in to steal.

Folks too lazy or uninclined gotta pay for convenience.

[Peikko 1,575]

There is no 'middle man' in Europe selling merchant service accounts in fact until I came to the US I had no idea that this was a business. It's odd allowing anyone who wants to set up in business as a merchant service provider the ability to do so, far from creating more competition and cheaper services, has in fact created a totally redundant but lucrative business. So much for choice always being in the best interests of the great unwashed.

Edited June 9, 2011 by The Truth™

[slim 1,531]

You still have a choice. Don't use them. Or, carry cash. You're always free to shop somewhere else.

[Peikko 1,575]

Clearly for you choice is one of those words you toss out when you have nothing to say. People have the 'choice' not to have a mains water supply, or attach themselves to the city sewage system or rig up their own personal electric systems or many and various 'choices' that are simply stupid choices (so not really choices in any meaningful way). Choice the way you use it is a puritanical ideological gesture - a veritable "cut off your nose to spite your face" action.

Edited June 10, 2011 by The Truth™

[ScottThuy 140]

Grocery stores - all but three of them - here in the area bombard me weekly with offers like these:

$5.00 off your $50.00 purchase

$5.00 off your $30.00 purchase

Spend $50.00 receive a $10.00 gift card

So they can give me up to 20% worth a discount on my shopping but struggle with a $0.44 fee when I swipe my card at the end of the transaction (which earns me yet another 2% - 5% off the purchase I made). If swipe fees are so rouinous, then why doesn't the retailer give me a break when I pay in cash? Do you really mean to tell me that $0.32 worth a difference in the swipe fee will make it back into my pocket? I've got some bridge to sell, you know.

Media was reporting today that if the retailers did not have to pay such high transaction fees they would give a debit card discount much like a cash discount... really? They are going to give me a discount if they save .44?.. there has to be more to this...

[Mr. Big Dog 10,747]

You still have a choice. Don't use them. Or, carry cash. You're always free to shop somewhere else.

Even if you pay cash, you're still paying the same as the next guy that swipes. In fact, the guy that swipes might actually earn a cash back percentage that you, as a cash customer, don't get. Used properly, cards can actually save you money. Takes discipline. I do that all the time. Those carrying balances on their cards - which I do not - and those paying cash - which I also do not - foot the bill. Works for me so keep shelling out the green. I can use it.

[Mr. Big Dog 10,747]

Media was reporting today that if the retailers did not have to pay such high transaction fees they would give a debit card discount much like a cash discount... really? They are going to give me a discount if they save .44?.. there has to be more to this...

First, it's .32 not .44 since what we're talking about is a reduction of the fee from .44 to .12. And what you read in the news is the campaign that the NRF - the retailers - has launched to get that fee reduced. They want you to be on their side. What better way to do it than to imply - no commit - that you would benefit from this reduction. You won't, of course, since that fee reduction will go into the retailer's bottom line rather than your pocket. On the other side of the equation, the banks will find a way to make up for that lost revenue. And guess where that is coming from? Yes, from your pocket. So, now you will pay the same at the retailer since the savings ain't coming back to you and more at the bank since they need to make up for the lost revenue. Banks: at least cut even. Retailers: certainly win. You: bend over.