WASHINGTON — The Senate on Thursday voted to pass a massive financial-reform bill that promises immediate changes in the way retailers accept debit cards.
The Dodd-Frank Wall Street Reform and Consumer Protection Act, which was expected to be signed by President Obama, for the first time directs the federal government to monitor and regulate debit-card interchange fees. The bill gives the Federal Reserve Board nine months to create rules that set a framework for interchange fees to be at a level that is “reasonable and proportional” to the costs incurred by card issuers.
“Passage of this law makes an important first step forward by giving the Federal Reserve Board regulatory authority to reduce debit interchange fees and reform anticompetitive rules,” said Peter Larkin, president and chief executive officer, National Grocers Association.
“This is a long-fought victory for supermarkets and their customers across the country,” said Leslie G. Sarasin, president and chief executive officer, Food Marketing Institute.
Banks are now expected to argue that the fees are needed to cover their costs to protect fraud, an industry source told SN. Retailers are expected to counter that argument by showing that a relatively small portion of the fee is spent on fraud prevention.
Two aspects of the new law that take effect immediately will allow retailers to begin offering discounts or incentives for consumers to pay using cash, checks, debit or credit cards, and also allow retailers to set a minimum transaction for the acceptance of credit cards, not exceeding $10.
“Eliminating obstacles to giving a discount or other benefit for cash, check or debit cards will make it easier for retailers to reward customers who are clued into these fees and choose not to use credit cards," said Mallory Duncan, senior vice president and general counsel, National Retail Federation, Washington.