Groups Opposing Debit Card Rule Have PAC, Lobby Support

[Donnachaidh]

http://sunlightfoundation.com/blog/2011/04/13/groups-opposing-debit-card-rule-have-pac-support/

In the first two months of 2011 groups associated with a coalition opposing the implementation of new rules for debit “interchange” fees that banks charge to businesses had already contributed over $500,000 in political action committee money to dozens of lawmakers, including backers of a bill that would delay the rules from going into effect.

The Electronic Payments Coalition is opposing a new rule proposed by the Federal Reserve as part of the Dodd-Frank financial reform bill that would cap debit “interchange” fees at 12 cents per transaction. This amounts to a more than seventy percent reduction in cost per transaction.

Interchange fees have become an increasing profit center for banks and credit network companies. In the past, credit networks like Visa and MasterCard have set the fees, while the banks issuing cards reaped the profits, which topped $45 billion in recent years. Electronic network operators like Visa and MasterCard gain business by setting higher fees, which then entice banks to issue more cards on their respective networks so that banks can profit from the fees.

It is no surprise then that the coalition opposing limits on interchange fees consists of the network providers, the biggest banks, and their trade groups. Credit unions and smaller community banks have also joined the coalition. These smaller, more locally focused banks fear that the rule may affect their much smaller profits and benefit the bigger banks that can weather a haircut over interchange fees. This is despite the fact that the rule applies only to fees paid to banks with profits of $10 billion or more.

More at the link --