Merchants Beat Wall Street

Wall Street reform negotiators struck a deal Monday to regulate the swipe fees that major banks and credit card companies can charge to merchants — costs that are passed on to consumers in the form of higher prices. The cost to merchants of using credit cards has more than doubled since 2003 even as merchants’ profits have declined, a contradiction only explained by the monopolistic system that lets banks continuously raise swipe fees.

The deal, struck between Sen. Dick Durbin (D-Ill.) and key House negotiators, leaves out some elements that consumer advocates had been fighting for. It allows fees charged to reloadable, prepaid debit cards — generally used by the poor — to remain unregulated. And it allows an exemption for states that use debit cards to dole out benefits. But, for the first time, banks and credit card companies will face restrictions on the fees they can charge merchants for the privilege of accepting credit and debit cards. (Read a summary of the deal here.)

Last week, merchants descended on the Capitol to make the case for reform.

“This agreement is a major victory for small business owners and consumers fed up with big bank and credit card industry rip-offs,” said Rep. Peter Welch, a House Democrat from Vermont who was involved with the negotiations. “It preserves key protections for the grocers, retailers and country store owners most affected by out-of-control swipe fees, while addressing legitimate concerns of the industry. I am confident this agreement will be approved by the full committee because every conferee represents small business owners who are tired of serving as a piggy bank for Visa and MasterCard.”

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Swipe Fee Deal: Merchants Beat Wall Street.