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National Restaurant Association - Fed: Swipe fee exemption working for small banks

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Fed: Swipe fee exemption working for small banks

A Federal Reserve report released May 23 shows that an exemption designed to protect small debit card issuers from the "reasonable and proportional" interchange fee standards that cover large issuers is working as intended.

The National Restaurant Association has been a leading voice in the swipe reform debate and has helped secure important reforms to the interchange fee market. Congress passed debit card fee reforms (known as the Durbin Amendment) as part of the Dodd-Frank Wall Street Reform Act in 2010. Reforms aimed to ensure that swipe fees charged to merchants when customers pay by debit card were “reasonable and proportional.” The Federal Reserve was responsible for implementing the law, which limited swipe fees at 21 cents per transaction for large debit card issuers. Small banks and almost all credit unions were exempt from the fee standards. 

According to the Federal Reserve’s report, small banks and credit unions—those with consolidated assets of less than $10 billion—received 43 cents per transaction in 2012, about the same amount as the average per-transaction fee received prior to the reforms taking effect. Banks and credit unions who responded to a survey indicated that they have not incurred significant compliance costs in implementing requirements that they enable two unaffiliated debit card networks on each debit card.

“The Federal Reserve Board, along with the GAO, FTC and other sources, continues to find that the small bank and credit union exemption is working just as merchants predicted it would,” said Scott DeFife, NRA executive vice president, policy and government affairs. “Debit card fee reforms have been, and continue to be, very important to the restaurant community and our customers. We are hopeful the courts will resolve lingering issues surrounding small-ticket debit increases the card networks voluntarily and unfairly imposed on merchants following the reforms.”

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