[Congressional Record (Bound Edition), Volume 157 (2011), Part 6]
[Senate]
[Pages 8742-8743]
[From the U.S. Government Publishing Office, www.gpo.gov]




                            INTERCHANGE FEES

  Mr. DURBIN. Mr. President, later this week we are going to consider 
an issue which is complicated, but it is an issue that affects every 
single American who ever takes a piece of plastic and pays for anything 
at a hotel, a restaurant, a convenience store, tuition at a school, or 
a charitable deduction to the Red Cross in the midst of a disaster. If 
you use plastic, every time

[[Page 8743]]

that debit card--we are talking just about debit cards for this 
conversation--every time that debit card is swiped, there is a fee that 
goes to the bank that issued the card. One may think to oneself, I 
wonder how they negotiate those fees. The answer is, they don't. What 
happens is the credit card companies--the two giants, Visa and 
MasterCard, working through the issuing banks--determine what is going 
to be charged every time someone swipes the card.
  What does a local grocery store have to say about it? Nothing. Their 
alternative is to not accept plastic at all. Visa and MasterCard say, 
you want to use our card, you play by our rules and our rules will tell 
you how much we take every time you swipe a card. I have seen it 
happen, and my colleagues have too, where you go into a store and shake 
your head because that young person in front of you just bought a candy 
bar and is using a piece of plastic to pay for it and you think to 
yourself, Why didn't they reach in their pocket and pull out a dollar 
bill to pay for it. Instead, they swipe the card, and we know what 
happens. That person selling the candy bar just lost money, because the 
banks and the credit card companies are going to get that swipe fee 
which happens to be more than the profit this little grocery store is 
going to make on a candy bar.
  Naturally, retailers across America have said, this isn't fair to us. 
We have no negotiating power when it comes to how much is taken out 
each time there is a plastic transaction for debit cards, and the 
consumers don't know. We know as retailers, but the consumers don't 
even know. There is no transparency. There is no competition. What is 
wrong with this picture?
  If we believe in a free market, we believe in those two things. We 
ought to believe there would be some competition so maybe there would 
be one debit card company that charges a lower fee. Maybe there would 
be special consideration given if somebody paid in cash.
  I guess this dates me, but there was a time when people paid in cash 
for almost everything, except when they used a check, and that was 
rare. And when they processed the check, it was pennies. Right now, the 
Federal Reserve tells us that for each and every debit card 
transaction, the average fee charged is 44 cents.
  When we passed an amendment here last year, we said to the Federal 
Reserve, What is the actual cost to the company, the issuing bank and 
the credit card, debit card company, for processing this transaction? 
They said, 10 cents or 12 cents, and they are charging over 40 cents on 
each transaction. Who pays it? We all pay it. Even if you walk into a 
store to pay cash, that merchant has put a price on a good that 
considers the fact that most people are using plastic so they have to 
raise the price to cover that fee. So we said to the Federal Reserve, 
Sit down and figure out what is reasonable and proportional in terms of 
the cost that should be collected every time someone swipes a card.
  Well, this is a big political issue, one of the biggest. One might 
say it is a multibillion-dollar issue, and it is. Because each month in 
America, over $1.3 billion is collected from customers all across 
America when they swipe their debit cards. Where does the money go? 
Most of it goes to the biggest banks on Wall Street--the same banks 
that were just moaning and groaning a few years ago about how they 
needed a bailout because they made some big mistakes. They are back 
again. They want a bailout when it comes to these debit cards. They 
want to be able to continue to collect 40 cents and more on every 
transaction.
  We passed a law that said the party is over. Starting July 21, there 
will be a new rule that will establish a reasonable fee, and they have 
been fighting this with all of their might, all of their lobbyists, all 
of their workers, all the letters they can send, against this reform. 
Why? Because it involves huge amounts of money for these major Wall 
Street banks and credit card companies.
  We have to bring an end to this. Consumer groups across America, 
labor groups, and small business groups--retail federations, merchants, 
saloon keepers, hotel owners, restaurant owners, convenience store 
owners--all across America have said we have to quit this. This isn't 
fair to us and to our customers. Let us have a reasonable amount 
charged for what is actually taking place with the debit card and we 
can live with it, but not four times as much as they are charging 
today. Incidentally, go up to Canada--not a lot different than the 
United States. They have debit cards and credit cards there, issued by 
banks. Do my colleagues know what the interchange fee is charged in 
Canada today? Zero. No charge. No charge at all to the merchant who 
takes a debit card to Canada. The same companies, Visa and MasterCard, 
charge zero in Canada and 40 cents in the United States. Aren't we 
blessed to have two great credit card companies who dreamed up how to 
stick it to American consumers at the benefit of American banks on Wall 
Street particularly? That is what this is about.
  Most of my colleagues have gone home over the last week or two and 
they have heard about this issue because it means a lot to a lot of 
people. What we did was exempt in this law credit unions and community 
banks. Some people say, Why did you exempt them? Why shouldn't they 
have reduced fees too? Well, we want to make sure that financially they 
are not disadvantaged by this, and we put in a specific exemption, sent 
it to the Federal Reserve to write up their rules to protect them. I 
have said on the floor and I will say it again, if at the end of the 
day the rule from the Federal Reserve does not provide adequate 
protection for credit unions and community banks, I am ready to sign up 
today to put in even more protection in the law. I will be there. I 
want to make sure they understand. They were exempted because I believe 
they should be, and I want to make sure that exemption works.
  But I don't care what happens to the Wall Street banks. I don't care 
what happens to these credit card companies. They seem to end up on 
their feet when it is all over anyway. After giving them billions of 
dollars in taxpayers' money to bail them out of their mess that they 
made of things in this recession, what did they do? They sent us a big 
wet kiss in the form of multimillion-dollar bonuses for all of their 
officers, smiling all the way to the bank with taxpayers' money. We 
don't owe them a thing.
  The Members who will come to the floor this week and vote with those 
big banks and those credit card companies really have to ask 
themselves: When are you ever going to stand up for consumers and 
retailers and merchants and small businesses across America? Is 
somebody going to speak up for them in this Chamber?
  That is what this debate is about, and I hope at the end of the day 
my colleagues will stand tall and say no to Wall Street, no to the 
credit card companies; that they will stand by the retailers and 
merchants, to give them a chance for transparency and competition, to 
give them a chance for a reasonable--reasonable--fee for what is 
actually transpiring in this transaction.
  Mr. President, I yield the floor.

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