Durbin, Welch Write to Bernanke on Interchange Fees
Letter Comes Days After European Commission Announced Interchange Cap of .2%
Washington, D.C. – In a letter to Federal Reserve Board Chairman Ben Bernanke today, Assistant Majority Leader Dick Durbin (D-IL) and Congressman Peter Welch (D-VT) urged the panel to review the new interchange fee regulations the European Commission announced this week and to include the Commission’s analysis and recommendations into the Board’s assessments of debit interchange fees charged in the United States.
“This week, the European Commission proposed to carefully regulate the debit and credit card interchange fees that Visa and MasterCard require merchants to pay to card-issuing banks. After conducting a thorough multi-year investigation, the Commission concluded that interchange fees are unjustifiably high, that they are impeding innovation and market competition, and that they result in higher retail prices that harm consumers,” Durbin and Welch wrote.
“For years, we have sounded the alarm about unregulated interchange fees and the harms they pose to consumers and the American economy. Our nation is undergoing a transition from a cash and check-based currency system to a system where American dollars are primarily transacted electronically. While this transition has brought many benefits, it has also resulted in the delegation of control over our sovereign currency to private entities.”
“Central banks and antitrust regulators throughout the world have taken proactive steps to ensure competition, transparency and fairness during this shift from paper to electronic currency, but regulators in the United States have been slow to act and have fallen behind the global curve. We believe regulators in our country must act affirmatively to rein in abusive fees and practices in the electronic payments system, and we hope that the European Commission’s announcement serves as a wake-up call to action.”
“The Commission’s recommendation of an EU-wide 0.2% debit cap is compelling evidence that the Board formulated reasonable debit interchange limits consistent with the law in its proposed rulemaking and failed to do so in its final rulemaking. We urge the Board to adjust its regulations to reflect the Commission’s proposal, particularly as applied to small dollar debit transactions.”