In the wake of Sen. Dick Durbin's Debit Card Swipe Fee Amendment to The Financial Regulatory Reform Bill, MasterCard has issued a press release playing on consumers' worst fears of its possible implications. The National Restaurant Association issued a statement supporting the amendment earlier this week, saying the potential limit on interchange fees would help the often inexplicably growing expense for restaurants.
But credit card companies and banks have understandably disavowed the continually challenged amendment.
"Now that the Senate has approved The Financial Regulatory Reform Bill, MasterCard urges House and Senate conferees to reject the amendment tacked on by Senator Dick Durbin, which will hurt the people and businesses it is supposed to protect," MasterCard said in the statement.
The release seemed to play on the fears raised by counterarguments to interchange fee caps, including the idea that consumer rewards programs could shrink if interchange fees were fixed at a lower rate. Some say credit companies and banks use these fees to cover those rewards.
"The amendment is a shrewd but cynical approach to getting American consumers to pay big-box merchants' fair share for the benefits these merchants get from electronic payments. There's a price-tag on this bill, and it will be paid by the American consumer," said Noah Hanft, MasterCard general counsel, in the release.
"If American consumers have any doubt about who will pay the bill, they should ask Australian consumers, who saw their annual fees rise significantly and rewards shrink after the government there put artificial controls on interchange fees. At the same time, there's no evidence that merchants there lowered prices to reflect the cut in fees."
Embattled by banks and credit card companies, Sen. Durbin issued a release last week defending the amendment as a response to and fix for Visa and MasterCard price fixing in merchant interchange fees. The Durbin amendment would direct the Fed to issue rules to ensure that debit interchange fees are reasonable and proportional to the processing costs incurred, according to his statement.
