Last Thursday, a dozen small business owners from Bed-Stuy and surrounding parts of Brooklyn met at the Sugar Hill Disco & Restaurant on the corner of Fulton and Nostrand Avenue to call on local lawmakers to protect debit card swipe fee reform.
With signs that read, “Don’t Delay, We Need Swipe Fee Reform NOW!” the protesters stood in the rain, urging Senators Charles Schumer (D-NY) and Kristen Gillibrand to fight against a recent move filed by Congress last week to “study and delay” rules that would reform debit card swipe fees as an amendment to a small business measure (S. 493) currently on the Senate floor.
Last summer, under the Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act, President Barack Obama signed into law restrictions on the amount banks can charge merchants for debit card transactions.
But the banking industry and major credit networks are pushing back, saying that a proposed federal cap on swipe fees charged by card users would hurt their bottom line.
Officials from the Retail Industry Leaders Association (RILA), a trade group that represents over 200 retailers, claim that retailers across the country are losing billions of dollars each month because of swipe fees, which banks charge retailers for processing debit cards.
Swipe card fees are often a huge expense to small business owners and in turn hurt consumers due to retailers having to raise prices to offset fees.
"I got involved in the campaign to protect swipe fee reforms because, more than ever, small business owners need relief, said Wendy McClean, owner of the Denim Lounge on Bedford Avenue. “If the Durbin Amendment goes into effect and these commonsense reforms happen without delay, I can grow my business and create jobs."
The protesters, many of them owners of small shops, restaurants, and other businesses, went to D.C. March 15 to rally for swipe fee cuts after having the rug pulled from underneath them in lieu of Senator Jon Tester’s (D-Montana) last-minute bid to stop passage if the Durbin Amendment, which was scheduled to go into effect this coming July.
That week, Tester, a longtime vocal critic of the Durbin Amendment and the rules being worked out by the Federal Reserve to implement it, introduced the Debit Interchange Fee Study Act as a means to further study the amendment’s restrictions on debit card fee income and routing arrangements.
If Tester’s proposed legislation is passed, the Durbin Amendment could be delayed for as long as two years.
“This affects me as well because every time customers use their debit card I have to charge them, which is unfair because I’m getting charged by the banks,” said Eboni Holloway, a participant in the protest who has her own basket-making business online.
“So it’s kind of like a Catch-22, you can’t win for losing and a lot of times what’s happening now is that the customer is also being charged unbeknownst to us sometimes until they call us back and let us know that their bank has charged them for using their debit cards.”
Tester's amendment would also put off rules proposed by the Federal Reserve, which would cap the fees at about 12 cents per transaction, down from an average of 44 cents now.
On top of that, Federal Reserve Chairman Ben Bernanke has said that his agency won’t have the final rule in place by the April 21 deadline because bank regulators need more time to sift through more than 11,000 comment letters it has received on the proposed fee cap.
Despite the power of the banks protesters remain adamant that swipe fee reform needs to happen quickly.
“Most people don’t carry cash anymore, very few,” said Akeesha Freeman, owner of Sugar Hill. “In Bedford-Stuyvesant we already have to put a certain levy on how much we accept from credit cards, as far as a limit like $10 or $15, because the fees are so high that if you don’t, they don’t balance out.
"So whereas you’re paying these high fees and you’re trying to be creative in stretching the dollars, growing the business and still trying to maintain your actual clientele, this reform is a big help for us because we want to expand in our business and compete with the outside market.”
Tester will need 60 votes in the Senate to get a delay. A vote is expected to take place this week.