Lawmakers Unveil Swipe-Fee Compromise

Lawmakers have unveiled a compromise over how to address swipe fees, the charges assessed by large banks and credit card companies on merchants that accept debit and credit card payments from their customers.

Swipe fees have long been a problem for many small businesses.

The National Small Business Association says that although the compromise doesn’t go as far as NSBA would prefer, it does offer some relief for small businesses.

“The conference committee’s swipe-fee compromise is not ideal,” said NSBA President Todd McCracken, “But at the end of the day, we’d rather take some steps forward than watch the anti-competitive interests of large banks win out over small business yet again.”

Swipe fees have been a sweet spot for major financial institutions, even in the downturned economy, as just 10 credit and debit card issuers raked in more than 80 percent of the $48 billion earned by the industry in swipe fees for 2008 alone, according to the NSBA.

NSBA said it's pleased that the compromise still includes language directing the Federal Reserve to ensure that swipe fees charged for debit card transactions are “reasonable and proportional” to the actual costs incurred to process the transaction. Another NSBA-supported provision that made the final cut will allow merchants to offer discounts for a particular form of payment, i.e. cash or check. Additionally, the compromise language still allows merchants to set a minimum transaction amount—$10—for payment by credit card.

The compromise would not allow merchants to offer discounts to customers using lower-fee credit and credit cards.