Dive Brief:

• More than 400 U.S. retailers have signed a letter to members of Congress, urging lawmakers to preserve the so-called “Durbin Amendment” to the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.

• The amendment, championed by U.S. Sen. Dick Durbin (D-IL), limits the fees that credit card companies can charge for transactions through retailer point-of-sale systems. Retailers believe that credit transactions made using EMV cards should carry the same, lower swipe fees charged for debit transactions; Rep. Jeb Hensarling (R-TX) favors repeal, characterizing the amendment as “harmful federal price controls.”

• Durbin himself in March filed a letter in Congress saying that the credit card swipe fees that large banks and card issuers charge are hindering competition in electronic payments. 

Dive Insight:

Retailers have been lobbying lawmakers to reduce swipe fees for years, and the battle is heating up again. 

The 400-plus retailers who signed the letter sent to Congress on Tuesday contend that the Dodd-Frank reforms — and Durbin’s amendment in particular — have increased competition on price and security from payment companies beyond Visa and MasterCard. “Existing debit card fee reforms matter a great deal to our individual businesses,” the retailers wrote in their letter to Hensarling (who chairs the House Financial Services Committee, which is considering the repeal of several portions of Dodd-Frank, including Durbin’s amendment) and Randy Neugebauer (R-TX), who chairs the Subcommittee on Financial Institutions and Consumer Credit.

Retailers called credit and debit card acceptance “a prime example of a nonfunctioning marketplace,” adding “The debit card fee and rule reforms prescribed in Section 1075 of the Wall Street Reform and Consumer Protection Act have provided significant relief to Main Street businesses from anti-free market practices employed by global credit and debit card brands."

The introduction of chip-and-PIN (EMV) cards has complicated the matter, sparking a debate between merchants and card issuers over whether or not customers should sign and/or enter a PIN when using the new cards. Banks say a signature is adequate protection against fraud, while retailers believe that verifying a credit transaction using an EMV card is essentially the same as clearing a debit transaction, and should carry the same (lower) swipe fees.

Retail groups asked the Federal Trade Commission to examine the issue earlier this year. In fact, retailers are actually calling for further regulation.

“The competitive gap between international and U.S. payment card acceptors is growing every day that the U.S. market fails to move toward a more transparent, equitable, and free market for card acceptance,” the retailers argue in their letter. “There are several reforms still needed in the credit card marketplace to improve payment acceptance as the United States continues to adopt new and innovative ways to pay in the mobile and e-commerce spaces. Debit card reforms have been a major step in the right direction, and any removal of those reforms would be a monumental step in the wrong direction for U.S. businesses and consumers.”