[Congressional Record Volume 157, Number 45 (Thursday, March 31, 2011)]
[Senate]
[Pages S2020-S2026]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         INTERCHANGE FEE REFORM

  Mr. DURBIN. Madam President, I rise to speak about the issue of swipe 
fees. Most people do not know what a swipe fee is, but it is almost 
part of your daily life. The next time you reach into your wallet or 
purse and pull out a piece of plastic to pay for something--such as my 
debit card--and present it at a retailer or a restaurant or a hotel or 
a gas station, understand what is happening in that transaction. There 
are several things that are not even visible.
  What is happening in that transaction is, you are paying that 
merchant and your bank is going to honor that payment from your account 
on your debit card, but then the bank and credit card company are going 
to charge the merchant for the transaction.
  In days gone by, if we paid in cash, obviously, there was no fee 
involved. If we paid with a check--which was done for a long time and 
is done less and less now--there were pennies charged to process the 
check. Whether the face amount of the check was $1 or $100--pennies to 
process the piece of paper through the system.
  A much more efficient system is being used with debit cards, where we 
actually are withdrawing money from our own account to the credit of 
the restaurant or the retailer. Unfortunately, there is a fee involved 
charged to the merchant or retailer called the swipe fee--accurately 
called the swipe fee because what has happened is, these major 
companies--Visa and MasterCard and the banks that issue their cards--
have established how much each transaction will pay in this swipe fee 
or interchange fee.
  The Federal Reserve recently did an analysis and found something 
interesting: They found that the average swipe fee across America is 44 
cents for each transaction. Then they said: Well, what does it actually 
cost to process this debit account movement of money from one place to 
another? The answer was: 10 cents or less.
  So there is a substantial charge involved in the hundreds, thousands, 
tens of thousands, millions of transactions that go on every single 
day, and it has a direct impact on the places where we do business. It 
means there is an added cost to the retailer or merchant that we are 
doing business with for the use of the debit card that goes beyond the 
actual cost to the bank involved.
  You say to yourself: Well, that is business, isn't it? If you are 
going to take these cards, and you want the convenience of using these 
cards, you have obviously negotiated 44 cents and that is the way it 
goes. Wrong. There is no negotiation involved. The retailers and 
merchants literally have no bargaining power in what that fee will be, 
and over the years, that swipe fee, or interchange fee, has been 
creeping higher and higher. For many businesses across America, it is 
the second or third most expensive item in doing business. That is 
right. Beyond the cost of personnel and workers and beyond the rental 
and utilities paid or health insurance comes the swipe fee--the fees 
charged by credit card companies for the use of debit cards and credit 
cards.
  What we said last year, while we were debating financial reform, was, 
this price fixing by the credit card companies--and there are two 
giants, Visa and MasterCard, that control 80 percent of the card 
transactions in America--this swipe fee that is being charged by them 
should be reasonable and proportional to the actual cost of the 
transaction. They should not be able to force feed and price fix an 
excessive swipe fee, or interchange fee, on retailers and merchants 
across America.
  We said to the Federal Reserve: Take a look at this and try to figure 
out a way to establish a reasonable, proportional fee since the credit 
card companies and the big banks are not going to negotiate. The Fed is 
in the process of doing it.
  We also said any bank or credit union with less than $10 billion in 
assets will not be affected by this. Our object was to make sure the 
hometown banks, the local banks, the local credit unions, could 
continue to receive interchange fees without any type of oversight by 
the Federal Government. Some people said: Why didn't you include them? 
Well, we tried to give them an opportunity to continue to do business 
because, frankly, those who are closest in the communities are the ones 
we ought to be mindful of and protective of.
  Perhaps I have a little prejudice involved too. The biggest banks in 
America--the top 1 percent of banks in America--are the ones that do 
almost 60 percent of this card business. I am talking about the same 
Wall Street banks that ended up getting a bailout from the Federal 
Government, to the tune of hundreds of billions of dollars. I do not 
have a lot of sympathy for them. They made some stupid mistakes and the 
taxpayers came to their rescue. From my point of view, we should not be 
subsidizing them or creating an opportunity for them to fix prices when 
it comes to merchants and retailers across America.
  This passed last year with a strong bipartisan vote of 64 Senators, 
and the biggest banks in America and the biggest credit card companies 
in America have been working nonstop ever since to stop this from going 
into effect. They have poured more resources into this effort than I 
have ever seen, and I have been around this place for a while. They 
want to stop this because they hate swipe fee reform like the devil 
hates holy water. For them, it is a dramatic loss of money. How much? 
Each month--each month in America--these debit swipe fees generate $1.3 
billion--$1.3 billion--for the banks at the expense of merchants and 
small businesses and large businesses, too, for that matter, across 
America. But not just at their expense. These swipe fees are being paid 
every time a person uses a debit card or a credit card to pay the 
government, to pay a university, to make a charitable contribution. 
That is a reality, and $1.3 billion a month--most of it going to the 
biggest banks in America--they believe is worth fighting for.
  So the fight has been joined, and Senators have come to the floor and 
submitted an amendment to postpone this swipe fee reform for 2 years--2 
years--to study it. Let me see, 24 months times $1.3 billion--over $30 
billion they want in a handout to the biggest banks and credit card 
companies in America. I do not think that is fair. It is sure not fair 
to the small businesses that had asked me to introduce this and ask me 
to continue to fight for it. It is not fair to these businesses or 
their customers.
  You see, our reform efforts are not just supported by the businesses. 
They are supported by the Consumer Federation of America, the largest 
consumer advocacy group in the United States. They understand that if 
you are dealing with a competitive business--let's assume you have gas 
stations across the street from one another and you make more 
profitability at one gas station, they can lower prices and be more 
competitive with the gas station across the street. The same is not 
true when it comes to big banks and credit cards. When it comes to 
credit cards, we have not a monopoly but a duopoly--two monopolistic 
companies, very little competition between them. There is a lot of 
competition in small town America and Main Street America.
  Some people ask me why I tackle some of these issues that involve the 
big banks and credit card companies and others. They say: Don't you 
understand these operations you are fighting are pretty large in terms 
of their resources and their political might? There is truth in that. 
The banks are a $13 trillion industry in America, according to the 
American Bankers Association--$13 trillion--and last year the banking 
industry in America made over $87 billion in profits.
  Visa and MasterCard were spun off from big banks a few years ago and 
now are multibillion-dollar companies that control nearly 80 percent of 
the payment card market.
  People tell me these financial industry giants have unlimited 
resources,

[[Page S2021]]

and they are going to fight when there is $1 billion a month on the 
table.
  Well I do not think the people of Illinois sent me--or sent from 
their own States other Senators--to hand the keys of this country over 
to big banks and credit card companies. They sent me to make sure Wall 
Street banks follow the same rules of the road that Main Street 
businesses follow every single day.
  There is nothing wrong with fees charged for services provided, as 
long as those fees are transparent and are set in a competitive market 
environment. Don't tell me you are for a free market and then say but 
Visa and MasterCard can fix prices. Don't tell me you are for a free 
market and then say those prices they fix have to be concealed and 
hidden from the public.
  When markets are characterized by transparency, competition, and 
choice, consumers benefit. But consumers do not benefit when fees are 
hidden, changed without warning or set by agreement between 
competitors. Sadly, that describes many of the fees banks and card 
companies have charged in recent years.
  We passed the Credit CARD Act of 2009 and then the Dodd-Frank Wall 
Street Reform Act last year and the Consumer Financial Protection Act 
was also included. We targeted many of the hidden fees consumers pay in 
America. If we do not do it, ladies and gentlemen, if the Senate does 
not do it, I would say to my colleagues: It will not be done.
  These powerful economic business entities in America need to be 
watched closely. Do not take my word for it. Take the word of those who 
analyze the recession which we are dealing with. Left to their own 
devices, these entities will go to extremes when it comes to profit 
taking, and that is what is happening when it comes to these big banks 
and credit card companies today. If we do not stand for consumers and 
small businesses on the floor of the Senate, shame on us. Who else is 
going to do it?
  By making fees transparent and helping to inform consumers, our laws 
will help the financial services market work better for all Americans.
  This swipe fee, or interchange fee, reform amendment I added to the 
Dodd-Frank bill also addressed an anticompetitive market failure in the 
debit card system. For years, the banking industry has engaged in a 
collusive practice. The banks that issue the cards have let Visa and 
MasterCard fix the interchange fee rates banks receive from merchants 
every time a debit card is swiped. The banks get the fees, but they do 
not set the fees. Their friends at Visa and MasterCard set the fees 
that will be charged. This is price fixing, purely and simply, by Visa 
and MasterCard on behalf of thousands of banks, and this price fixing 
is currently unregulated.
  Of course, every bank in the country is going to tell us the 
interchange system is working just fine, Senator. That is because with 
centrally fixed interchange rates, banks do not have to worry about 
competition. Each bank knows the bank down the street is getting the 
same fee they are. But there are two fundamental problems with Visa's 
and MasterCard's fixing of these interchange rates and swipe fees.
  First, centralized rate fixing gives the card-issuing banks no 
incentive to manage their operational and fraud costs efficiently. All 
banks in the Visa network are guaranteed the same Visa price-fixed 
interchange rate whether they are efficient or not. There is no 
competition and the fees literally subsidize inefficiency.
  Second, because Visa and MasterCard, the credit card giants, control 
nearly 80 percent of the debit card market and merchants can't 
realistically refuse to accept them, Visa and MasterCard have the 
incentive to constantly raise interchange rates to encourage banks to 
issue more of their cards. So fee rates keep going up and the merchants 
are helpless to do anything about it.
  I have heard so many speeches on the floor of the Senate about how we 
love our small business, and we should. It is the backbone of the 
economy of America. This interchange fee goes to the basic survival of 
small businesses across America. If this Senate is going to decide that 
it is more important to protect the big banks and credit card companies 
than small businesses, shame on us. We should accept the reality that 
it means these small businesses will struggle, will not be as 
profitable, will not hire as many people. Can that make us a better 
country? Can that help us out of the recession?
  Merchants can't say no to Visa and MasterCard because of the market 
power of these two credit card giants and because swipe fee rates are 
fixed by the networks. A merchant doesn't even have the option of 
negotiating a better deal, so merchants are stuck with whatever the 
increase is in swipe fees, which is then passed along to consumers in 
the form of higher prices for gasoline and groceries. Consumers, and 
particularly low-income and unbanked consumers, pay for the debit 
interchange system to the tune of $16 billion a year.
  Incidentally, do my colleagues know what the interchange fee is in 
Canada charged by Visa and MasterCard--the same fee I have been talking 
about here--through the banks in Canada? Zero. There is no interchange 
fee. Do my colleagues know what it is in Europe? A fraction of what it 
is in the United States. Why is that the case? Why would these credit 
card giants say they can't survive oversight of their interchange fees 
in the United States and charge zero in Canada and pennies in Europe? 
Because the Canadian Government came to them and said, We are not going 
to let you rip off our small businesses. We will regulate you. They 
said, Never mind, we won't charge an interchange fee in Canada. In 
Europe, the same thing happened. If we are silent, exactly the opposite 
will occur. The credit card companies will continue to increase these 
fees at the expense of American consumers and small businesses and 
large businesses alike.
  Some people out there apparently trust Visa and MasterCard to price 
fix in a fair and benevolent way. They don't see the need for reform. 
If you believe the giant credit card networks can be trusted to fix 
interchange prices in a way that is fair for banks, merchants, and 
consumers, then you should be fine with the status quo and have no 
problem prolonging it for years.
  That is exactly what the amendment coming before us will do. It will 
postpone for 2 years and put in a study of this issue. Well, we should 
study things before we act on them, that is for sure. But let's look at 
the record. We have had nine different congressional hearings on this 
issue and three separate studies already. We have studied this one to 
death. What the banks and credit card companies want us to do is to 
keep on studying so they can collect $1.3 billion every single month. 
That is their strategy.
  I don't place my trust in Visa and MasterCard, and I am not alone. 
Last year, a strong bipartisan majority in Congress said we better 
stand up for small business and retailers and consumers, and we passed 
this law. The banks and credit card companies are pulling out all the 
stops. I learned yesterday that Chase, which is one of the major 
issuers of these debit cards across America, sent a letter to their 
customers in a number of States and said, If you don't repeal the 
Durbin amendment, we are going to end up in a position where we won't 
be able to give you all of the rewards which we are offering you on 
your debit and credit card.
  First, this relates to debit cards which don't carry the big reward 
programs. Secondly, this kind of veiled threat from these credit card 
companies should not be taken seriously by any consumer across America.
  The last time we had credit card reform, we unfortunately waited 
months before it became law. The credit card companies saw it coming. 
So what did they do? They dramatically raised their interest rates on 
consumers across America during that period of time. Don't expect any 
favors from this industry. If we do not regulate the credit card 
industry and the banks that issue these cards, trust me, the consumers 
will continue to lose time and time again.
  As for Chase, I don't think there are going to be any poppy flowers 
sold on their behalf on street corners. If I recall correctly, their 
last earnings report showed a 48-percent increase in profits over their 
previous year. They are doing quite well. Now it is time for

[[Page S2022]]

them to give small businesses and consumers across America a break when 
it comes to the fees they are charging.
  Congress said that if banks are going to let Visa and MasterCard fix 
the interchange rates that merchants pay banks, then the rates fixed on 
behalf of the biggest 1 percent of banks must be reasonable and 
proportional--reasonable and proportional. This is a narrowly targeted 
reform through the Federal Reserve. The new law will provide a 
constraint on ever-rising interchange fees that the current broken 
market does not provide.
  We have given this job to the Federal Reserve. They have put out 
draft rulemaking and they are soliciting comments across the country. 
Chairman Bernanke called me a couple of days ago and said they needed 
an additional few weeks to come up with the rule that will still go 
into effect in July of this year. I understand that. I want him to do 
his best. I want him to follow what this law says--exempting credit 
unions and community banks with less than $10 billion in assets.
  The Fed has taken this job seriously, and I am glad they have. The 
Fed knows that many small banks are concerned the reform might affect 
them even though the law clearly exempts them. Last week Chairman 
Bernanke told all those small banks at a meeting that he understands 
their concerns and will work with them to make sure the final rule 
addresses them.
  I urge my colleagues to stand up for the reasonable reform Congress 
passed last year. We don't need another study. A study is an excuse for 
the credit card companies and the biggest banks in America to take $1.3 
billion a month out of the economy and away from small businesses.
  I want my colleagues to know there is broad support for debit 
interchange reform. I have received many letters in recent days from 
individuals, small businesses, and organizations that support reform. I 
will readily concede that the big box retailers are also benefitted by 
this. I am not trying to hide that. That is a fact. But the simple fact 
of the matter is this has been generated by a lot of local people and a 
lot of local businesses.
  Let me tell my colleagues, this is hardball as far as the big banks 
and credit card companies are concerned. I happened to mention that I 
was brought to this issue 4 or 5 years ago by a good friend of mine, a 
very conservative gentleman who has been very successful in downstate 
Illinois, named Rich Niemann from Quincy, IL. He owns a bunch of 
grocery stores and has expanded all across the Midwest. He is a hard-
working guy the like of which is hard to find. He and I disagree on a 
lot of things, but I always turn to him when I have a business issue 
because I know he will give me an honest analysis. When Rich told me 
that he started accepting plastic at his grocery stores, it went from 
just a small number of transactions to now almost half of the 
transactions at his grocery stores are with plastic and he says, They 
are killing me with this interchange fee. The credit card companies and 
debit card companies are charging him this fee and he has no voice or 
bargain in the process. They charge whatever they want to charge and he 
pays it. He is a man who is trying to create jobs in small-town 
America. I thought he had the right approach to this. They should be 
able to recover their reasonable, proportional costs for using a debit 
card, but why should they be able to penalize a business such as Rich 
Niemann's grocery stores? I said this publicly a couple of days ago 
and, not surprisingly, some folks on the other side decided to go after 
and attack Rich Niemann as a businessman. I will stand with him. From 
my point of view, he is a good man. I don't think he votes for a lot of 
Democrats. I hope once in a while he might vote for me, but 
notwithstanding that, I respect him so much and I am sorry he had to 
take this beating in the press from the other side. He can take it, 
though. He has been a tough guy who has stood up for his family and his 
business all his life.
  Incidentally, on March 18 I received a letter from the American 
Council on Education and nine other national associations representing 
colleges and universities and here is what they said:

       Debit card swipe fees have been a hidden expense for 
     students and families paying for college for which they 
     receive no benefit. As a result of the law enacted last year 
     and the Federal Reserve's proposed rule, we believe colleges 
     and universities will see reduced debit card costs which they 
     will be able to pass on to students through lower costs as 
     well as increased resources for institutional grant aid and 
     student services.

  We don't think about that. We think about gas stations. But the fact 
is students use plastic for everything, and the universities and 
colleges end up paying these swipe fees to the big banks and the credit 
card companies and debit card companies as a result.
  On March 15 I got a letter from the Consumer Federation of America. 
Some of the folks on the other side said this will never help 
consumers. These businesses are going to take all the savings that 
would otherwise go to the big banks and credit card companies and they 
are going to take those and go home. Well, I disagree, and so does the 
Consumer Federation of America, the leading consumer advocate in this 
country. Here is what they said on March 15:

       The current interchange system is uncompetitive, 
     nontransparent, and harmful to consumers . . . CFA does not 
     support delaying implementation of the new law.

  That is what the amendment on the floor today suggests.
  On March 15 I received a letter from the consumer groups Public 
Citizen and U.S. PIRG, and here is what they said:

       The Durbin amendment was designed to curb anticompetitive 
     practices in the payment card market . . . we do not support 
     legislation calling for delay of the Durbin swipe fee 
     amendment.

  Yesterday I received a letter from Americans for Financial Reform, a 
coalition of over 250 national, State, and local groups, including 
consumer, civil rights, investor, retiree, labor, religious, and 
business groups. Here is what they said:

       From a consumer point of view, the current interchange 
     system is not defensible. Feeble competition in the payment 
     card marketplace has led to unjustifiably high debit 
     interchange fees that the poorest Americans, generally cash 
     customers, are required to subsidize at the store and at the 
     pump. . . . We oppose efforts to delay the implementation of 
     the Durbin amendment through Congressional action.

  Make no mistake, the big banks and card companies want to stop this 
rule before it is issued, because they are afraid that once it is 
issued and once people realize the savings to business and consumers 
across America, they will never go back. So they are pouring it on to 
try to move this amendment as quickly as possible to stop the Federal 
Reserve from issuing the rule which the law requires them to issue.
  On March 17, the Hispanic Institute sent me a letter and here is what 
they said:

       Sixteen countries and the European Union regulate swipe 
     fees and their experience demonstrates that regulation 
     benefits consumers in lower fees and lower cost of goods. 
     There is no evidence that swipe fee regulation will lead to 
     an increase in other consumer fees.

  The National Small Business Association--as I said, we spend more 
time on the Senate floor venerating small businesses than almost 
anything other than our troops. Here is what the National Small 
Business Association said in a statement on March 23:

       The Durbin amendment and the proposed Fed rule are 
     beneficial to America's small businesses. Further delay, 
     equivocation, and another big-bank handout are not.

  I also received a letter from 185 national and State merchant trade 
associations representing 2.7 million stores and 50 million employees.
  Let me say at the outset, the coalition I am representing is not 
nearly as powerful or as large politically as the big banks and the 
credit card companies. They can't match them in terms of their 
political power, the number of lobbyists they hire, the number of 
letters they send, and all the rest. For the most part, they represent 
a lot of small businesses that are trying their best to get fair 
treatment. Here is what they say:

       We have repeatedly sought to negotiate with the card 
     companies to reform this broken market and bring savings to 
     our customers. Fifteen years later, we have concluded that 
     normal market forces cannot and do not work in a broken 
     market with price-fixing among banks controlled by a duopoly.

  They mean Visa and MasterCard.
  They urged Congress to oppose any efforts to delay swipe fee reform.
  The United Food and Commercial Workers, a union which I used to 
belong to when I was growing up, said:


[[Page S2023]]


       Delaying swipe fee reform will also delay the creation of 
     thousands of jobs each year that will result in reduced 
     interchange fees. This reform is long overdue for working 
     Americans everywhere.

  The National Community Pharmacists Association and the National 
Association of Chain Drug Stores sent me a letter and said:

       We request any assistance you can provide in ensuring the 
     timely completion of the final regulations and enforcement of 
     the Durbin amendment.

  The National Association of College Stores and 20 State associations 
wrote and said:

       Credit and debit purchases account for more than $100 
     million annually in interchange fees paid by college 
     bookstores and their student and parent customers.

  Let me repeat: $100 million a year paid by college bookstores and 
their student and parent customers in interchange fees to the banks and 
credit card companies.
  They go on to say:

       Excessive swipe fees that would otherwise be returned to 
     students through lower prices, grants, and student services 
     are being misdirected toward credit card companies and large 
     banks. . . . Every month of delay means higher costs for 
     students and parents at a time when schools are being asked 
     to do more with less funding.

  I ask unanimous consent that these letters be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                American Council on Education,

                                   Washington, DC, March 18, 2011.
     U.S. Senate,
     Washington, DC.
       Dear Senator: I write on behalf of the higher education 
     associations listed below to oppose efforts to delay, amend, 
     or repeal the debit card swipe fee reforms enacted last year 
     in the Dodd-Frank Wall Street Reform and Consumer Protection 
     Act (``Dodd Frank Act'') and regulatory implementation of 
     these reforms by the Federal Reserve. We strongly support 
     these needed reforms, which will provide real relief to 
     students, their families, and colleges and universities 
     across the country.
       Debit card swipe fees have been a hidden expense for 
     students and families paying for college for which they 
     received no benefit. As a result of the law enacted last year 
     and the Federal Reserve's proposed rule, we believe colleges 
     and universities will see reduced debit card costs which they 
     will be able to pass on to students through lower costs as 
     well as increased resources for institutional grant aid and 
     student services. In addition, implementing this reform will 
     create an opportunity for institutions to offer discounts to 
     students for payments made with checks and debit cards.
       During this time of economic insecurity, steps like those 
     undertaken in swipe fee reform will help students and their 
     families manage the costs of college with increasingly 
     strained budgets.
       We urge the Senate to stand up for students and the 
     colleges and universities that serve them by ensuring that 
     these debit card swipe fee reforms are fully implemented in a 
     timely manner.
           Sincerely,
                                              Molly Corbett Broad,
     President.
                                  ____



                               Consumer Federation of America,

                                                   March 15, 2011.
       Dear Senator: As Congress assesses the impact on consumers 
     of debit interchange legislation it enacted last year, the 
     Consumer Federation of America would like to share with you 
     the conclusions we have reached:
       The current interchange system is uncompetitive, non-
     transparent and harmful to consumers. It is simply unjust to 
     require less affluent Americans who do not participate in or 
     benefit from the payment card or banking system to pay for 
     excessive debit interchange fees that are passed through to 
     the costs of goods and services. As a result, CFA does not 
     support delaying implementation of the new law.
       The Federal Reserve should ensure that financial 
     institutions are reimbursed for legitimate, incremental debit 
     card costs as it finalizes rules implementing new interchange 
     requirements. If such compensation does not occur, these 
     institutions could increase debit card and other related 
     banking charges on their least desirable and most financially 
     vulnerable consumers: low- to moderate-income account 
     holders.
       Once the law is implemented, the Federal Reserve should 
     also pay close attention to how it affects the financial 
     viability of small depository institutions, especially credit 
     unions, which often provide safe, lower-cost financial 
     products to millions of Americans.
       Although CFA did not take a position on the interchange 
     provisions of the Dodd-Frank Act, we have carefully examined 
     the law and filed comments with the Federal Reserve on how to 
     implement it fairly and effectively. For example, we urged 
     the Federal Reserve to consider increasing its proposed 
     interchange pricing standards as allowed under the law to 
     include several specific, debit-related expenses incurred by 
     financial institutions. CFA also recommended that the Federal 
     Reserve launch a broad, balanced study upon implementation of 
     the effects of the rule on consumers.
       From a consumer point of view, the current interchange 
     system is not defensible. Feeble competition in the payment 
     card marketplace has led to unjustifiably high debit 
     interchange fees that the poorest Americans are required to 
     subsidize. The new law gives the Federal Reserve authority it 
     can use without delay to make sure that the debit interchange 
     reimbursement financial institutions receive covers their 
     legitimate, incremental costs for providing debit card 
     services.
           Sincerely,
                                                  Travis Plunkett,
     Legislative Director.
                                  ____

                                                   March 15, 2010.

             Consumer Groups Oppose Durbin Amendment Delay

       To the Bipartisan Congressional Leadership: U.S. PIRG and 
     Public Citizen write in support of the timely implementation 
     of the Federal Reserve swipe fee regulation as prescribed 
     under the Durbin Amendment of the Dodd-Frank Wall Street 
     Reform and Consumer Protection Act enacted last summer. The 
     law provides numerous reforms to financial industry practices 
     beneficial to consumers, depositors, investors and taxpayers. 
     Included in the Dodd-Frank Act is the Durbin Amendment, which 
     limits the interchange swipe fees charged to retail merchants 
     on debit card transactions. The Durbin amendment was designed 
     to curb anticompetitive practices in the payment card market.
       It is our understanding that there has been proposed 
     legislation introduced to delay the implementation of the 
     Durbin amendment. We do not support legislation calling for 
     delay of the Durbin swipe fee amendment. While we have urged 
     the Federal Reserve Board of Governors to modify its proposed 
     rule implementing parts of the Durbin Amendment (parts have 
     already taken effect), the rulemaking process, not further 
     legislation, is the appropriate venue for any changes. In 
     addition, consideration of a delay in the Durbin amendment 
     could otherwise imperil timely implementation of the Dodd-
     Frank Act's other provisions designed to remediate the 
     economic crisis caused by risky, unregulated Wall Street 
     practices.
       We appreciate your consideration of our views urging that 
     the Durbin amendment be implemented by the Federal Reserve, 
     not delayed in the Congress.
           Sincerely,
     U.S. PIRG and Public Citizen.
                                  ____



                               Americans for Financial Reform,

                                   Washington, DC, March 30, 2011.
       Dear Senator/Representative: We write to express Americans 
     for Financial Reform's continued support for the Durbin swipe 
     fee amendment which we supported and was included in the 
     Dodd-Frank Wall Street Reform and Consumer Protection Act. 
     The current interchange system is uncompetitive, non-
     transparent and harmful to consumers. It is simply unjust to 
     require less affluent Americans who do not participate in or 
     benefit from the payment card or banking system to pay for 
     excessive debit interchange fees that are passed through to 
     the costs of goods and services. As a result, AFR does not 
     support Congressional delay of implementation of the new law.
       As you know, Americans for Financial Reform is an 
     unprecedented coalition of over 250 national, state and local 
     groups who have come together to reform the financial 
     industry. Members of our coalition include consumer, civil 
     rights, investor, retiree, community, labor, religious and 
     business groups as well as renowned economists.
       We oppose efforts to delay implementation of the Durbin 
     amendment through Congressional action. The new law gives the 
     Federal Reserve adequate authority it can use without delay 
     to make sure that the debit interchange reimbursement 
     financial institutions receive covers their legitimate, 
     incremental costs for providing debit card services.
       From a consumer point of view, the current interchange 
     system is not defensible. Feeble competition in the payment 
     card marketplace has led to unjustifiably high debit 
     interchange fees that the poorest Americans, generally cash 
     customers, are required to subsidize at the store and at the 
     pump.
       Thank you for your consideration of our views. If you or 
     your staff have any questions, please contact Ed Mierzwinski 
     at U.S. PIRG.
           Sincerely,
     Americans for Financial Reform.
                                  ____



                                       The Hispanic Institute,

                                   Washington, DC, March 17, 2011.
     Hon. Harry Reid,
     Majority Leader, U.S. Senate,
     U.S. Capitol, Washington, DC.
     Hon. Mitch McConnell,
     Minority Leader, U.S. Senate, Russell Senate Office Building, 
         Washington, DC.
       Dear Senators Reid and McConnell: On behalf of The Hispanic 
     Institute, I urge you to oppose Senate Bill S. 575, House 
     Bill H.R. 1081, and any other effort to delay, amend or 
     repeal the Durbin amendment which passed last year as part of 
     the Dodd-Frank Wall Street Reform Act. Delaying 
     implementation of the Durbin amendment hurts consumers, 
     especially low- income consumers.

[[Page S2024]]

       The Hispanic Institute's mission is to provide an effective 
     education forum for an informed and empowered Hispanic 
     America. We have already studied the impact of swipe or 
     interchange fees on Hispanic America. In fact, we have been 
     studying the problem of swipe fees for years and have found 
     that the market for these fees is broken and that Hispanic 
     American consumers and businesses are harmed as a result.
       In 2009 we published a study, ``Trickle-Up Wealth Transfer: 
     Cross-Subsidization in the Payment Card Market,'' that broke 
     new ground by showing that hidden swipe fees imposed on 
     credit and debit cards result in a reverse transfer of wealth 
     and make low-income Americans subsidize high-income 
     Americans--without them even knowing it. We also found that 
     these fees are part of the prices consumers pay every day and 
     that when fees are lower, prices are lower for consumers. Our 
     ground-breaking work has since been cited by the Boston 
     Federal Reserve.
       On February 17th, we submitted testimony to the House 
     Financial Institutions Subcommittee of Financial Services, 
     along with U.S. PIRG and Public Citizen, voicing support for 
     the Federal Reserve rule to deal with the problems we have 
     found. Unfortunately, the banking industry is fighting to 
     stop these needed reforms. If the banking industry is 
     successful in delaying or repealing reform, consumers and the 
     American economy will pay. Studies indicate that consumers 
     will pay an extra $1 billion to banks every month that reform 
     is delayed, and the more than 95,000 new jobs that reform 
     would create each year will be shelved. This should not 
     happen.
       As we noted in our testimony:
       The current swipe fee market is broken and all consumers 
     pay more for less because of escalating swipe fees;
       Sixteen countries and the European Union regulate swipe 
     fees and their experience demonstrates that regulation 
     benefits consumers in lower fees and lower costs of goods;
       There is no evidence that swipe fee regulation will lead to 
     an increase in other consumer fees; and
       Reductions in swipe fees should result in substantially 
     lower prices for all consumers.
       The Durbin amendment and Federal Reserve rule allow banks 
     to compete on swipe fees and avoid regulation. Reasonable 
     limits are only imposed when the banks centrally fix their 
     fees. If they would compete, all American consumers and 
     businesses would be far better off. We urge you to oppose S. 
     575 and H.R. 1081, and press for the Federal Reserve's rule 
     to be finalized and take effect in order to address the 
     terrible problems with swipe fees that the Hispanic Institute 
     has identified. Thank you for your consideration.
           Sincerely,
                                                      Gus K. West,
     President, Board Chair.
                                  ____


       [From National Small Business Association, Mar. 23, 2011]

               Bills Introduced To Delay Swipe Fee Reform

       The U.S. Federal Reserve (Fed) in Dec. 2010 proposed new 
     rules limiting the size of the fees banks can charge 
     businesses every time a debit card is used to pay for a good 
     or service. The Fed was required to address debit-card swipe 
     fees thanks to an NSBA-supported amendment, introduced by 
     Sen. Whip Dick Durbin (D-Ill.), to the Restoring American 
     Financial Stability Act (S. 3217). The final rule is expected 
     by April and currently is set to take effect on July 21, 
     2011.
       The Fed proposed a number of options that would result in 
     reduced swipe fees for debit-card transactions. One option 
     would allow issuers to set a flat fee of seven cents per 
     transaction. A second option would allow a sliding scale, 
     based on the purchase price, with a maximum fee of 12 cents 
     per transaction. The proposed rule exempts banks with less 
     than $10 billion in assets and does not apply to credit 
     cards.
       Although NSBA supports no interchange fees being charged on 
     debit-card transactions--since they clear, like checks, at 
     par--the proposal represents significant progress. Currently, 
     merchants pay, on average, debit card processing fees of 
     about 1.3 percent. According to the Fed, the average swipe 
     fee last year was 44 cents. This means that even the highest 
     option would result in swipe fees more than 70 percent lower 
     than the 2009 average.
       The proposed rules also still present issuers with a large 
     profit margin. According to one bank, a swipe-fee cap of 7 
     cents per transaction still would produce a profit margin of 
     about 8 percent, compared to the retail industry's average 
     profit margin of one to three percent.
       While the proposed rule was a significant victory for small 
     businesses, retailers, and consumer groups, it was met with 
     immediate howls by the banking industry, which collected 
     $16.2 billion from debit-card swipe fees in 2009. Arguing 
     that the proposed rule represented governmental interference 
     in the private market (and ignoring the fact that the 
     previous system differed greatly from any notion of a 
     competitive ``market''), the banking lobby responded to the 
     proposed rules with a multi-million advocacy campaign aimed 
     at undermining them.
       Last week, they achieved their first success in this 
     effort, when Sens. Jon Tester (D-Mont.), Bob Corker (R-
     Tenn.), Jon Kyl (R-Ariz.), Ben Nelson (D-Neb.), Tom Carper 
     (D-Del.), Pat Roberts (R-Kan.), Chris Coons (D-Del.), Mike 
     Lee (R-Utah), and Pat Toomey (R-Penn.) introduced 
     legislation, the Debit Interchange Fee Study Act (S. 575), 
     that would suspend the implementation of the Fed rule for two 
     years.
       The bill also mandates that a study on debit interchange 
     fees be conducted by the Fed, the Office of the Comptroller 
     of the Currency, the Federal Deposit Insurance Corporation, 
     and the National Credit Union Administration. The outcome of 
     this study is virtually guaranteed to be flawed, given the 
     parameters outlined by the bill.
       Companion legislation (H.R. 1081) has been introduced in 
     the House, by Rep. Shelley Moore Capito (R-W.Va.) and 27 
     cosponsors.
       NSBA is ardently opposed to these efforts, which clearly 
     are aimed at preventing the rules from going into effect 
     rather than illuminating the issue. The swipe-fee system 
     already has been the subject of three separate U.S. 
     Government Accountability Office reports and nine 
     Congressional hearings.
       The Durbin amendment and the proposed Fed rule are 
     beneficial to America's small businesses. Further delay, 
     equivocation, and another big-bank handout are not.
                                  ____

                                                February 28, 2011.
     To: Members of the United States Senate; Members of the 
         United States House of Representatives
     From: The 185 undersigned national and state trade 
         associations on behalf of the companies and customers we 
         represent
     Re: Debit Card Swipe Fee Reforms--Allow Implementation to 
         Move Forward
       The Merchants Payments Coalition, representing 2.7 million 
     stores and their 50 million employees, urges you to oppose 
     any efforts to amend, repeal or delay swipe fee reform. 
     Derailing swipe fee reform would take more than $10 billion 
     per year out of consumers' pockets and kill more than 95,000 
     new jobs.
       Big credit card companies have created a prim-fixing regime 
     that benefits the largest banks, including ``too big to 
     fail'' institutions that have received hundreds of billions 
     of dollars in federal bailout money, at the expense of Main 
     Street merchants and consumers.
       Small merchants in your community are powerless against the 
     big credit card duopoly. The card companies and big banks 
     have not and will not negotiate with businesses over swipe 
     fees. As a result, these fees:
       Have tripled over the last 10 years;
       Largely benefit the 10 biggest banks;
       Are the second highest expense many small merchants face 
     after labor costs; and
       Are rising faster than health care costs.
       This issue is unlike any other we have faced in business. 
     We have repeatedly sought to negotiate with the card 
     companies to reform this broken market and bring savings to 
     our customers.
       Fifteen years later, we have concluded that normal market 
     forces cannot and do not work in a broken market with price-
     fixing among banks controlled by a duopoly. So we reluctantly 
     came to Congress.
       After seven hearings in the House, two of which were held 
     since passage of the debit card reforms, a bi-partisan markup 
     in the House, and two hearings in the Senate on the issue, 
     legislation passed the United States Senate last summer by a 
     strong bi-partisan 64 to 33 vote with 17 Republicans 
     supporting the amendment. Changes were negotiated and adopted 
     during the conference process before the bill was signed into 
     law.
       The law directs the Federal Reserve to prescribe 
     regulations regarding interchange swipe fees on debit card 
     transactions and requires that the Federal Reserve establish 
     standards for assessing whether an interchange swipe fee is 
     reasonable and proportional to the cost incurred by the 
     issuer with respect to the transaction. After a lengthy and 
     thorough process conducted by the Federal Reserve of survey 
     design and collection, conference calls, meetings with 
     various groups, and survey analysis, the Board of Governors 
     voted unanimously in favor of publishing a proposed rule on 
     this subject. We see the proposed rule as a compromise of the 
     ideas advanced by the banks and networks and the ideas 
     advanced by the merchants and consumers.
       The statute further directs the Fed to publish a final rule 
     by April 21, which would take effect on July 21. The Fed has 
     indicated that it intends to meet these deadlines unless 
     Congress directs otherwise, We strongly urge you not to 
     support delay and to allow the rule to take effect as 
     scheduled.
       Swipe fee reform has been a key vote for each of our 
     associations every time it has been considered and will 
     continue to be. We would urge you to learn more about the 
     issue, listen to all sides, and not sign letters or support 
     legislation that seek to delay; repeal or modify the proposed 
     rule.
       We urge you to stand with your small Main Street merchants 
     and their customers and allow swipe fee reforms to take 
     effect on time.
           Sincerely,
                                      The undersigned national and
     state trade associations.
                                  ____



                                                         UFCW,

                                   Washington, DC, March 28, 2011.
     To All Members of the United States Senate
       Dear Senator: On behalf of the United Food and Commercial 
     Workers International Union (UFCW) and our more than 1.3 
     million members, we encourage you to oppose any effort to 
     delay or repeal the implementation of ``swipe'' fee reform, 
     also known as interchange fee reform.

[[Page S2025]]

       More than one million of our members work in the 
     supermarket and retail industry where swipe fees are a 
     growing cost of business and a concern for the continued 
     success of this important industry. Each time that a UFCW 
     cashier swipes a debit card, the supermarket is charged a 
     percentage of the sale. That fee, hidden from customers, is 
     reflected in higher prices, which in turn impacts our members 
     and customers each day.
       The banks and card companies want these fees to remain 
     hidden so that they can continue to reap large profits and 
     subsidize the costly benefits and rewards that they give to 
     their wealthiest cardholders. Make no mistake, the banks and 
     card companies want to delay the swipe fee reforms so that 
     they can continue to charge more than $1 billion in swipe 
     fees for each month of delay.
       But most importantly, delaying swipe fee reform will also 
     delay the creation of thousands of jobs each year that would 
     result from reduced interchange fees.
       This reform is long overdue for working Americans 
     everywhere. Our members have paid the price for rising 
     interchange fees for far too long.
       A bipartisan group of 64 Senators courageously passed this 
     important swipe fee reform in 2010. UFCW respectfully asks 
     that you oppose any efforts to delay these reforms and allow 
     the Federal Reserve rule to take effect on schedule later 
     this year.
           Sincerely,
                                                 Joseph T. Hansen,
     International President.
                                  ____

                                                    March 8, 2011.
     Hon. John Boehner,
     Speaker, House of Representatives,
     Washington DC.
     Hon. Harry Reid,
     Majority Leader, U.S. Senate,
     Washington DC.
     Hon. Nancy Pelosi,
     Minority Leader, House of Representatives,
     Washington DC.
     Hon. Mitch McConnell,
     Minority Leader, U.S. Senate, Washington DC.
       To the Bipartisan Congressional Leadership: The National 
     Association of Chain Drug Stores and the National Community 
     Pharmacists Association are writing in support of the 
     implementation of the Durbin Amendment, which was included in 
     the Financial Reform legislation enacted last year. The 
     Durbin Amendment limits the fees charged to retail merchants 
     on debit card transactions (known as ``swipe fees'') to a 
     level that is ``reasonable and proportionate'' to the costs 
     incurred by the banks and credit card associations to process 
     these transactions. The amendment also allows retail 
     merchants options on how their debit card transactions are 
     routed for processing, which provides market competition for 
     this part of the process.
       The law requires the Federal Reserve to write rules to 
     enforce the ``reasonable and proportional to cost'' 
     requirement by July 2011, although the precise date for 
     enforcing the routing rule is left to their discretion. At 
     this point, the Federal Reserve has issued draft regulations 
     on what is to be considered reasonable and proportionate, and 
     they have closed the comment period on the rules.
       We believe it is imperative that this process of writing 
     and issuing final regulations continue as required by the 
     law. Debit and credit card interchange fees currently total 
     close to $50 billion annually for retailers. The timely 
     promulgation and enforcement of the regulations will assure 
     the beginnings of reform for both debit and credit cards to 
     assure that fees are ``reasonable and proportionate'' for 
     retailers and the customers they serve in a highly 
     competitive marketplace.
       We request any assistance you can provide in ensuring the 
     timely completion of the final regulations and the 
     enforcement of the Durbin Amendment, and ask you to 
     communicate that position to the Federal Reserve.
       Please contact either Paul Kelly or Anne Cassity if you 
     have any questions.
           Sincerely
     Steven C. Anderson, IOM, CAE,
       President and Chief Executive Officer, National Association 
     of Chain Drug Stores.
     Kathleen D. Jaeger,
       Executive Vice President and Chief Executive Officer, 
     National Community Pharmacists Association.
                                  ____

                                              National Association


                                            of College Stores,

                                      Oberlin, OH, March 18, 2011.
       Dear Senator, On behalf of the National Association of 
     College Stores and the undersigned associations, I am writing 
     to ask you to not co-sponsor and to oppose S. 575, the Debit 
     Interchange Fee Study Act of 2011. This legislation would 
     delay and effectively kill debit card fee reforms scheduled 
     to go into effect this July; reforms that will have a 
     positive impact on colleges, universities, elementary and 
     secondary schools, and the students and parents they serve.
       Headquartered in Oberlin, Ohio, NACS is the professional 
     trade association representing the collegiate and K-12 
     retailing community. We represent more than 3,100 collegiate 
     and elementary and secondary bookstores including school 
     owned and operated bookstores, non-profit student owned 
     cooperatives, small privately owned bookstores, and contract 
     managed bookstore companies. NACS member stores serve nearly 
     95% of America's 17.5 million college students while 
     supporting the academic missions of education institutions.
       Last year Congress enacted reasonable and measured reform 
     to the swipe fees that colleges and universities, K-12 
     schools, and other non-profits, and small family owned 
     businesses pay Visa and MasterCard and the big banks every 
     time a student, parent, or alumni pay or donate at these 
     institutions and at collegiate and K-12 retail stores. In 
     fact, according to a recent report by the National 
     Association of College and University Business Officers found 
     nearly \1/3\ of all tuition and fee payments made to colleges 
     and universities and nearly half of all tuition and fee 
     payments made at community colleges in 2009 were subjected to 
     excessively high interchange swipe fees.
       Credit and debit purchases account for more than $100 
     million annually in interchange fees paid by college 
     bookstores and their student and parent customers. Excessive 
     swipe fees that would otherwise be returned to students 
     through lower prices, grants, and student services are being 
     misdirected towards credit card companies and large banks.
       Congress established a lengthy, deliberative, fair, and 
     open process for the Federal Reserve to carry out needed 
     debit swipe fee reforms and that process is still ongoing 
     through July, yet S. 575 is an attempt by the big banks to 
     derail this process indefinitely. Every month of delay means 
     higher costs for students and parents at a time when schools 
     are being asked to do more with less funding.
       We strongly encourage you stand up for education 
     institutions, collegiate and K-12 retailers and our student 
     and parent customers by not co-sponsoring S. 575, the Debit 
     Interchange Fee Study Act of 2011, and also opposing any 
     efforts to move this bill in the Senate.
           Sincerely,
                                            Brian E. Cartier, CAE,
                                          Chief Executive Officer.

  Mr. DURBIN. In closing, I know what I am up against. Don't take on 
Chase and all the big banks of America--the ones that have the lion's 
share of these debit cards--and Visa and MasterCard and not get suited 
up for battle. This is a darn important battle. It will test beyond the 
wisdom or justice of this proposal; it is going to test who owns the 
United States Senate. Is this a Senate that is willing to stand up for 
small business across America? Is this a Senate that is willing to say 
we will fight for consumers even at the expense of the profits of the 
banks and credit card companies?
  I think consumers across America know on which side we should be. I 
hope we will be. We were last year, with 64 Senators, Democrats and 
Republicans, joining to stand up for small businesses and large 
businesses alike, retailers and merchants. I know the big banks and 
credit card companies have enormous resources, and they have a reach in 
every direction. I know they are running commercials and sending an 
army of lobbyists to Capitol Hill. They also have allies in the Senate. 
They will pull out all the stops to roll back any effort to curb their 
abusive practices.
  I want my colleagues to know I think Main Street is worth standing up 
for--certainly, when it comes to their fights with Wall Street. Small 
businesses, consumers, universities, labor unions, and merchants are 
sick and tired of the banking industry's tricks, traps, and hidden 
fees. They want fees they can see, and they want them set up in 
competition, not fixed by credit card companies. They want the Wall 
Street banks to play by the same rules of the road that the Main Street 
businesses play by every day, and I want that too. I hope the Senate 
does as well.
  I urge my colleagues not to let the big banks and credit card 
companies avoid accountability for 2 more years. In the name of a 
study, do not give a $30 billion handout to the biggest banks and 
credit card companies in America. That is exactly what the amendment 
filed on the Senate floor will do. Do not delay interchange reform. Do 
not delay swipe fee reform. Don't give those banks another 
multibillion-dollar handout with no strings attached.
  I urge my colleagues to let the Federal Reserve do the job that was 
sent their way. Let them move forward with the important process of 
swipe fee reform.
  On behalf of businesses and merchants all across America, they are 
counting on the Senate to be on their side to help them in reaching 
profitability and making sure their savings are passed along to 
consumers and in being the No. 1 engine for the creation of new jobs in 
America. Our question

[[Page S2026]]

is, Whose side are you on? I am on the side of small business and Main 
Street. I hope my colleagues will be as well.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Coons). The Senator from Massachusetts is 
recognized.

                          ____________________