The recent settlement agreement between a number of retail groups and the world’s two largest processors of credit and debit card payments has drawn considerable fire, and now a well-known federal lawmaker has weighed in.
The office of Sen. Richard Durbin (D-Ill.) recently urged retailers to take all efforts to have Congress reject a recent agreement between Visa and MasterCard and several merchant groups to settle a lawsuit over credit card swipe fees, according to a report from Bloomberg News. The settlement, which would be worth billions of dollars, has yet to be approved by a court, and Durbin’s office said if it is, then swipe fee regulations could take a significant hit.
“This is going to foreclose the prospect of good legislation for the foreseeable future,” Dan Swanson, senior judiciary counsel for Durbin’s office, said in a conference call with the Food Marketing Institute. “It will essentially be game over.”
Durbin was one of the chief lawmakers who made a case for the importance of imposing limits on debit card swipe fees in 2010 – and got an eponymous amendment added to the Dodd-Frank Wall Street Reform and Financial Protection Act – which has cut banks’ revenues by $8 billion annually, the report said. He has also said that the deal was a “stunning giveaway” by merchants to the card processors.
However, Durbin isn’t the only famous name urging merchant groups to reject the settlement, the report said. A number of trade groups including the National Community Pharmacists Association, the National Association of Convenience Stores, the National Grocers Association, Walmart and Target have all voiced opposition to it as well. Further, many other members of the National Retail Federation have said they do not support the decision, which they see as being extremely costly in the long run despite a brief temporary rollback in swipe fees built into the agreement.
This is because one of the provisions of the settlement is that merchants would not have the ability to sue Visa or MasterCard over swipe fee disputes in the future. With this power, it would be possible for either or both of the payment processors to substantially increase the amount they charge businesses for every Visa- and MasterCard-branded transaction they process.
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