By Steve Tetreault
Stephens Washington Bureau
WASHINGTON — In a move that could resonate at the cash register, the Senate recently voted to set limits on the fees that retailers must pay banks to process debit card transactions.
Senators voted 64-33 for an amendment that authorizes the Federal Reserve to regulate the interchange fees, usually 1 percent to 3 percent of a purchase, that financial firms charge businesses every time a customer’s card is swiped.
The legislation allows retailers to give discounts to customers who pay with cash. Stores also would be permitted to set thresholds for how much a customer must spend to pay by card.
“To make up for interchange fees, businesses are forced to raise their prices, cut back on expenses or something such as that,” said amendment sponsor Sen. Richard Durbin, D-Ill. “If left alone, it is going to get worse for small businesses that face higher fees, for consumers who face higher prices and for everyone but the banks and credit card networks.”
While retailers cheered, banks lobbied against the amendment, even after Durbin exempted banks and credit unions that hold less than $10 billion in assets.
The financial institutions argued it would hurt banks but not help consumers, as any windfall would be kept by the retailers.
They also argued customers would be inconvenienced if stores required them to spend certain amounts before they could pay by debit.
Sens. Blanche Lincoln and Mark Pryor, both D-Ark., voted for the amendment.
The discussion came as the Senate continued debate on a far-reaching bill to overhaul federal regulation of financial institutions.