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National Restaurant Association - Passage of swipe-fee reforms a success, NRA says

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Passage of swipe-fee reforms a success, NRA says

Debit swipe-fee reforms put into place last year have benefited restaurateurs and other small business owners, but more could be done, the National Restaurant Association says.

"Since debit reforms went into effect a year ago, restaurants and their customers have been aided by a more transparent system in which card companies are prevented from arbitrarily increasing debit interchange rates," said Scott DeFife, the NRA's executive vice president of policy and government affairs. "We know there is more work ahead, specifically on smaller-ticket transactions and credit swipe-fee reform, but the important news is that the status quo is changing for the better."

DeFife noted reforming credit and debit swipe fees has been one of the Association's top priorities for more than a decade.

Because of this legislation, the Federal Reserve now has the power to determine reasonable fees for "big bank" debit cards. Those rules went into effect Oct. 1, 2011, and as a result, swipe fees that merchants pay for debit-card transactions are now capped at 21 cents per transaction, down from the average 44 cents they previously paid. While the 21-cent fee is better, it is still significantly higher than the 12-cent fee the Fed originally proposed.

Despite the reforms' success, however, the NRA has joined a lawsuit arguing the Fed didn't follow Congress' intent to ensure debit-card swipe fees are "reasonable and proportional" to the cost of processing the transactions. Because of the way the regulations are written, card companies and big banks have been able to increase debit fees for merchants with lower-ticket transactions well beyond what's reasonable, the NRA and its allies assert in the lawsuit. Oral arguments on the issue are set to begin Oct. 2.

"While the Federal Reserve's rule significantly brought down debit swipe fees for many merchants, some restaurant owners have been forced to pay higher fees on smaller-ticket transactions - evidence the Fed provided card networks with too much latitude to increase rates well above a reasonable and proportional level," DeFife said.

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