Interchange Fee Regulation Doesn’t Belong in Wall Street Reform Bill Say 131 House Members

Washington, DC – U.S. Reps. Debbie Wasserman Schultz (FL-20), and Kenny Marchant (TX-24) today released a letter signed by 131 Members of the House of Representatives addressed to the conferees of the pending financial regulatory reform legislation.  The letter signed by 71 Democrats and 60 Republicans—stresses that an amendment regulating credit and debit card interchange fees would harm every consumer that uses these cards to pay for everyday essentials and large purchases alike as well as have a negative impact on small community banks and credit unions.

With 507 million debit cards in circulation and $1.63 trillion in debit and prepaid transactions in 2009, the impact of this amendment would be felt by nearly every American family.  Despite the broad consequences of the amendment, it was attached and passed onto the Senate version of the financial regulatory reform bill without any hearings on the specific debit card provisions in the Senate amendment.  The unintended consequences the amendment would have on American consumers who use debit and credit cards every single day should have been investigated for the harm they would bring to consumers before the Senate voted.

“If this amendment stands, our constituents will pay more for basic banking products and credit cards and no longer receive valuable services like fraud and identity theft protection paid for by the current interchange system,” said Rep. Debbie Wasserman Schultz.  “Worse, the Senate amendment destroys the economics of prepaid debit card programs, which are increasingly relied upon to deliver banking products to underserved and unbanked recipients because they provide a convenient, lower cost form of payment. Under the Senate amendment, consumers lose.”

A 2009 GAO report stated: “Many industry participants and others agreed that the costs of card acceptance might shift from merchants to card holders if interchange fees were limited, card surcharges permitted, and interchange revenues decreased.”  Likewise, similar legislation in Australia, passed in 2003, resulted in Australian consumers paying approximately A$480 million more in additional fees on credit cards each year.

“I am proud today to stand with more than 130 of my colleagues to fight government intervention in our free markets and federal price controls that would negatively affect our community banks, credit unions, and consumers,” said Rep. Marchant.  “I came to Congress to ensure that the federal government does not get to pick the winners and losers in a private transaction.  The provision that we are working to remove would allow a Washington bureaucrat to do just that.”