Dick Durbin Takes On the Debit Card Mafia

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Sen. Dick Durbin successfully passed an amendment two weeks ago that would limit the outrageously high interchange fees that Visa and MasterCard charge merchants for debit card transactions. This was a big win that reins in some pretty indefensible industry practices, but Visa and MasterCard are (unsurprisingly) fighting back. How? Well, they can hardly expect to gain much sympathy for either themselves or the Wall Street giants whose profits might get trimmed by Durbin’s amendment, so instead they’re mounting a coordinated campaign that claims it’s small credit unions who will suffer the most. This is despite the fact that Durbin’s language specifically exempts banks with less than $10 billion in assets and specifically requires merchants to accept all cards in a particular network regardless of which bank issues them. If a small credit union charges a higher fee than Citibank, your local 7-11 would have to take their Visa debit cards anyway.

So small credit unions are pretty well covered. But that hasn’t stopped Visa and MasterCard from taking to the parapets anyway. Via Annie Lowrey, though, it looks like Durbin is fighting back. Here’s a letter he sent to the CEOs of Visa and MasterCard:

It appears that, in an effort to frighten small banks and credit unions into opposing the amendment, your companies are threatening to make changes to your small bank interchange fee rates and to your network operating rules. These changes, which are not in any way required by the amendment, are unnecessary and would disadvantage small card-issuing institutions.

I ask you each to state unequivocally that you are neither threatening nor planning to take steps that would purposefully disadvantage small institutions, should the amendment become law. Further, I warn you that if your companies coordinate with each other or collude with your largest member banks to make changes to your fees and rules, it would raise serious concerns that you are engaging in an unlawful restraint of trade.

Good for Durbin. I hope he follows through with this.

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