Small Business, Banks Clash On Debit Card Fees

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There’s a battle brewing in the nation’s capital, one that might have a profound effect on small businesses across the United States.

According to The Hill, dozens of small business owners flocked to Capitol Hill to make their views known on the Durbin amendment, named after U.S. Sen. Dick Durbin. The amendment has been around since July 2010 as part of the Dodd-Frank Wall Street reform legislation, the article notes, and when implemented will put a cap on the bank fees that can be charged for debit card transactions.

It’s not hard to figure out why small businesses, particularly retailers who see debit cards used frequently, would be in favor of protecting the Durbin amendment. Anything that limits the expenses they cannot control has to be seen as a good thing, particularly given the recent economic picture. The dozens in Washington, D.C. Thursday were just a small slice of those likely to be interested in the outcome. To wit:

“Year after year, I have seen these fees continue to rise and prevent guys like me from lowering prices, expanding business or strengthening a local economy,” said Dennis Lane, who owns a 7-11 franchise in Quincy, Mass., and is a national spokesman for Reform Swipe Fees Now.

If the cap does go through with the Federal Reserve’s backing, the average rate charged per debit card transaction—some 44 cents—would likely drop to somewhere between 7 and 12 cents.

Of course, not everyone’s behind the plan:

Backers of the banking industry have pressed the case that the government shouldn’t be playing such a prominent role in a private-sector issue. Lawmakers and even Ben Bernanke, the Fed chairman, have also indicated that the amendment could have negative unintended consequences for small banks, even though it contains an exemption for banks with under $10 billion in assets.

Share your thoughts on this situation in the comments. We’ll see how it develops in the weeks ahead.


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