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NEW YORK As another battle over financial reform
brews in Washington, a broad coalition of U.S. lenders and card
networks is seizing the opportunity to try to recover billions
of dollars in annual revenue they lost last time around.
Lobbyists for the payments industry have been meeting with
key lawmakers since the Nov. 8 elections to argue that limits on
the fees they can charge for processing debit-card transactions
amount to un-American price controls that hurt consumers.
They face a formidable opponent: a coalition which says it
speaks for 12 million retailers, restaurateurs, doctors,
dentists and small business owners who pay the fees.
“Our argument is, look at what you are doing to Main Street
retailers if you repeal (the limits),” said Hannah Walker,
director of government relations for the Food Marketing
Institute, which represents grocers.
“It would hurt our businesses, increase costs to consumers
and cost jobs,” she said.
The latest lobbying push over so-called “swipe fees” has
drawn little attention, but banks and retailers have been at war
over card transaction fees for at least 20 years. The merchants,
after years of gaining little ground in the courts, took the
fight to Congress, where both sides say they support the little
The last round went to the merchants in 2010 when Congress
passed the Dodd-Frank act to make the financial system safer.
Part of the law required the Federal Reserve to impose swipe-fee
The last-minute addition of the provision, named after its
Senate sponsor, Illinois Democrat Richard Durbin, caught the
payments industry off-guard.
Since the Fed implemented the rule in 2011, lenders and card
networks have lost about $6 billion in annual revenue, according
to studies based on Fed data.
Now, with President Donald Trump promising to ease financial
regulations and Republicans lawmakers angling for more
free-market capitalism, the payments industry sees an
opportunity to undo the fee limits – and perhaps get an edge in
future legislative assaults.
“We go up there (to Capitol Hill) every day and meet with
members of Congress and their staff and walk them through why
this has been such a failure,” said Molly Wilkinson, executive
director of the Electronic Payments Coalition, which is
coordinating lobbying efforts.
The merchants, Wilkinson says, pocketed the cost savings
from the rule instead of passing them on to consumers.
While some other deregulation campaigns are driven by
interests of a few big firms, the push to get rid of the rule
has united big, regional and community banks, as well as credit
unions, card networks and at least eight trade associations.
Their lobbyists say the lost revenue makes it hard to
provide benefits such as free checking accounts or debit-card
They present the curbs to lawmakers as “an inappropriate
government intervention into the marketplace,” said Aaron
Stetter, executive vice president of the Independent Community
Bankers of America.
Payments lobbyists are first focusing on the House Financial
Services Committee, whose chairman, Texas Republican Jeb
Hensarling, has said he intends to get rid of swipe-fee
On Monday, banks launched an ad campaign on Capitol Hill
targeting more than 200 legislators who joined Congress since
2010, said James Ballentine, executive vice president of
congressional relations and political affairs at the American
Banks have also included a repeal in their requests to the
Trump administration, Ballentine said.
On Friday, Trump ordered a review of financial regulations,
and his spokesman said the White House would work with Congress
to overhaul Dodd-Frank.
Hensarling delivered such a proposal in September and it is
now being updated for the new Congress. Hensarling said last
month that repealing swipe-fee limits was “an important part” of
“As a matter of principle, Republicans do not believe in
federal price controls,” he said.
Yet lobbyists for both sides say the odds are against the
A key reason is that a repeal risks being cast as a gift to
banks that were vilified for the 2008 financial crisis. Bank of
America Corp, JPMorgan Chase & Co, and Wells
Fargo & Co account for roughly one-third of $2.4
trillion spent on debit cards every year, according to the
Nilson Report. (Graphic: tmsnrt.rs/2jUGjML)
Retail lobbyists have been emphasizing the political risks
when talking to lawmakers. Come re-election time, they can point
out, retailers will outnumber financial firms by more than
Vocal opponents of the card companies include big retailers,
such as Wal-Mart Stores Inc, Home Depot Inc and
“The task for us is made easier because people know this is
a somewhat radioactive issue,” said Doug Kantor, a lawyer for
the National Association of Convenience Stores.
Whatever happens, lobbyists say their latest effort is
preparing them for looming battles over credit-card transaction
fees, data encryption standards and evolving digital payment
For now, both sides say they are trying to get to know the
new Congress and learn which members are worth attention and
which arguments are most persuasive. They do not expect a final
vote before the fall, after lawmakers tackle taxes, healthcare
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