Chairman of the House Financial Services Committee Jeb Hensarling (R-TX) is set to introduce the Financial CHOICE Act in the coming weeks. The bill seeks to undo the Dodd-Frank Wall Street Reform and Consumer Protection Act that was passed in the wake of the financial crisis and largely addressed banking stability and risky lending practices. The bill also includes a repeal provision for the Durbin Amendment that lowered debit interchange fees for businesses and has saved businesses and consumers billions of dollars per year since it was enacted, and stands as one of merchants’ greatest victories in the payments space in recent years.
For independent grocers, interchange fees are the second-highest cost of doing business (only behind labor)-even with the savings achieved by debit reforms. With debit card transactions becoming more and more popular (transaction percentages have doubled in the last 15-years according to NGA survey data), interchange fees continue to be a major line-item for grocers.
Debit swipe fee reforms helped lower the cost of debit interchange to a more reasonable level for merchants. While independent grocers operate on a 1% profit margin, banks are pressuring Congress to repeal debit swipe fee reforms-where the profit margin for the average bank is 500%. Due to the high level of competition in the supermarket industry, grocers have passed on the savings they achieved through lower interchange rates to consumers. If debit reforms are repealed, the extra money earned by banks will go directly into their coffers-while businesses and consumers are further encumbered by high fees.
NGA has been meeting with members of the House Financial Services Committee in order to discuss our concerns with the inclusion of the Durbin Amendment in the CHOICE Act. However, it is going to take members of Congress hearing from folks back home in order to make an impact and move the needle.
