Foodservice and retail associations praised the U.S. Senate Wednesday for rejecting an amendment that had sought to delay the implementation of debit-card swipe fee reform scheduled to go into effect July 21.
As a result, the Federal Reserve will be able to cap fees at 12 cents a transaction compared with the current average of 44 cents per transaction.
The amendment, which was introduced by Sen. Jon Tester, D-Mont., was rejected by a vote of 54 to 45, just six votes shy of the 60 votes needed for passage.
The issue had long pitted restaurateurs and retailers against financial institutions. Members of the foodservice industry had argued that debit-card swipe, or interchange, fees were “exorbitant,” and that banks and card companies refused to negotiate with restaurateurs and retailers, who were forced to accept their terms and rates.
And given that many restaurants in the post-recessionary marketplace are operating on extremely thin margins, the rising debit-card fees posed one of the industry’s fastest-rising costs, said the National Restaurant Association.
“Debit and swipe fee rates are increasing at levels that often exceed the rate increases restaurant operators face for all other costs, including food, energy and healthcare,” said Scott DeFife, executive vice president of Policy and Government Affairs for the NRA.
Rob Green, executive director of the National Council of Chain Restaurants, called the vote a “win” for the restaurant industry.
“We’re very pleased the Senate saw through this last-minute agenda from the big banks and card companies,” he said. “We consider this big victory for the industry and its allies. This provides more transparency and more certainty for restaurants.
“We were up against a formidable opponent with the big banks,” Green said. “This is a case of David beating Goliath.”
DeFife noted: “We are grateful to Sen. [Dick] Durbin [D-Ill.] for his leadership and to the bipartisan group of Senators who stood up for swipe-fee reform, small businesses and consumers to allow these important regulations to move forward.
“The Federal Reserve has spent nearly a year working on regulations to ensure that debit-card fees are in line with what it costs to process these transactions,” he said. “The final rule is imminent and will represent intensive study and analysis. The restaurant industry relies on these common-sense reforms as we work to streamline costs and pass every bit of savings on to our guests.”
Matthew Shay, president and chief executive of the National Retail Federation, the parent of the NCCR, added: “With the economy still trying to gain momentum and consumers facing skyrocketing costs for necessities like food and fuel, this badly reform needed will help ensure our nation’s economic recovery. It will prevent more than a billion dollars a month from being pocketed by big banks and, in turn, allow retailers to hold down prices for consumers.”
Contact Paul Frumkin at [email protected].