Last year Congress stood up for consumers and small businesses and now Congress wants to take swipe free reform away.
Washington, D.C. (PRWEB) May 04, 2011
American Family Voices, a non-profit advocate for middle and low-income families on economic, health care, and consumer issues, today launched an aggressive TV and Web Campaign to highlight the misguided effort to repeal meaningful reforms aimed at benefiting U.S. consumers and small businesses. Visit http://www.bigbankbailout.com for more info.
The ads both on TV and the Web condemn 102 Senate and Congressional supporters of legislation sponsored by Senator Jon Tester (D-MT) S. 575 and Representative Shelly Moore Capito (R-WV) H.R. 1081 that will undo reforms passed a year ago that will bring fairness and competition to the broken debit market.
“Last year Congress stood up for consumers and small businesses and now Congress wants to take it all away,” said Mike Lux, President of American Family Voices. “Businesses and consumers, particularly those struggling to make ends meet, are just months away from getting long overdue relief from these excessive big bank fees. Congress should stand up for Main Street, not Wall Street, and leave swipe-fee reform alone. The Big Bank Bailouts need to stop.” http://www.bigbankbailout.com
The reforms, which passed with broad bipartisan support last year, address the lack of competition in the debit market, where Visa and MasterCard centrally set the prices that the big banks charge merchants every time a debit card is swiped. These fees, which have exploded to $20 billion annually, are for most small businesses the second-highest cost of doing business. These fees unfortunately translate into higher prices for consumers.
The reforms bring fairness to the broken system by requiring that the Federal Reserve ensure that the fees are “reasonable and proportional” to the cost of the transaction. A study conducted by the Federal Reserve found that these fees cost merchants on average $0.44 on ever transaction, while the actual cost is roughly $0.04. Because 70 percent of all swipe fees are collected by the 10 largest banks, the reforms narrowly focus reforms on those institutions at the root of the problem. Swipe-fee reform exempted all banks and credit unions with less than $10 billion in assets, meaning more than 99 percent of all banks will experience no change whatsoever. See http://www.bigbankbailout.com for more details.
Swipe Fee Facts:
- According to the Federal Reserve, despite claims by banks that debit fees have not changed, “Debit Card Swipe Fees Have Been Increasing. “More recently, both PIN and signature debit fees have increased, although PIN debit fees have increased at a faster pace.”
- According to the Government Accountability Office, Visa and MasterCard’s share of the debit market distorts costs in the debit market.
“Although issuers incur costs for offering cards, concerns remain about the extent to which interchange fee levels closely relate to the level of card program expenses or whether they are set high so as to increase issuer profits. In a competitive market, the price of the product and the cost of producing it would be closely aligned. However, producers with market power—such as monopolists or those offering goods not generally offered by others—have the ability to charge high, noncompetitive prices.”
- According to the Federal Reserve Bank of Boston, swipe fees cause cash-using households to pay $149 to card-using households each year. These costs translate into a boon for card-using households, which receive $1,133 each year from cash-using households in the form of rewards credits.
- According to the Federal Reserve Bank of Kansas City, “It turns out that in seven of the eight countries with the highest debit card usage per capita there is no interchange fee, casting empirical doubt on the proposition that interchange fees are necessary to stimulate usage through promotional activity and cross subsidy from the merchant side of the market to the consumer side.”
H.R. 1081 S. 575
To see the TV Campaign and Web video, visit http://www.bigbankbailout.com.