Arlington, VA – The National Grocers Association (NGA) today announced its strong opposition to the reintroduction of the Financial CHOICE Act, which would nearly double the rates food retailers pay each time a consumer uses their debit card. A discussion draft of the Financial CHOICE Act was released by U.S. Representative Jeb Hensarling (R-TX), the chairman of the House Financial Services Committee, and includes a provision to overturn the debit swipe fee reforms, also known as the Durbin Amendment, which passed as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010.
“Although the Durbin Amendment brought transparency and competition to a marketplace historically void of it, independent grocers continue to pay the highest swipe fees in the world,” said NGA president and CEO Peter J. Larkin. “Congress should be protecting Main Street independent grocers from price-gouging, not writing it into law.”
The Durbin Amendment successfully reformed anti-competitive price fixing in the debit marketplace by requiring that at least two unaffiliated debit routing networks be available for all purchase made using debit cards. The provision also limited debit interchange fees to 21 cents per transaction, as well as a 0.05 percent fee on all transactions to cover fraud and a one cent fraud prevention fee.
“While banks and card networks rake in record profits, independent supermarkets continue to operate on razor thin margins in one of the most fiercely competitive marketplaces. Swipe fees are the second largest operating costs for grocers and are out of their control. Rather than padding Wall Street’s pockets, savings from swipe fees could go to reinvesting in a grocer’s store, hiring more employees, and boosting the local economy. Congress can either side with Main Street grocers or anti-competitive Wall Street banks,” Larkin commented.
Each year, banks and financial institutions generate more than $79 billion in debit swipe fees, which contribute to a nearly 25 percent profit margin. Less than two percent of all U.S. banks and credit unions are affected by the Durbin Amendment, which requires financial institutions with more than $10 billion in assets to comply with the rule. Companies may exempt themselves if they establish individual debit rates without prescribing to those set by Visa and MasterCard.
Since its enactment, the Durbin Amendment has supported more than 37,000 jobs over the past five years and saved consumers nearly $6 billion after the first year since the policy’s implementation, according to economist Robert Shapiro.
to learn more about Debit Swipe Fee Reform.