The National Retail Federation (NRF) has announced the launch of an advertising campaign calling on the House to reject efforts to repeal debit card swipe fee reform that has saved retailers and their customers more than $40 billion and brought badly needed competition to the payments market.
“We want to make sure voters understand that swipe fees add to the cost of everything they purchase, and that before reform banks had created an uncompetitive market that allowed them to set these fees as high as they liked,” said NRF Senior Vice President for Government Relations David French. “Repeal would allow the monopolistic practices of the past to come back and allow the banks to start increasing these fees—and the prices paid by consumers—again. We want voters to know what is at stake.”
The campaign comes as the House prepares to vote the week of May 22 on the Financial Choice Act, a bill that would repeal swipe fee reform as part of a larger reversal of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Radio commercials are airing first in the Winston-Salem, North Carolina, area, the congressional district of Representative Ted Budd (R-NC), who has been an outspoken critic of swipe fee reform.
“It’s the bottom of the fifth and the big banks are up to bat,” a fictitious baseball announcer says in the 60-second spot as boos from the crowd are heard. “Not very liked around these parts are they?”
“Didn’t you hear? The big banks are trying to get Congress to repeal swipe fee reform,” another baseball announcer replies, explaining that reform has saved consumers $6 billion a year. “They want to do away with competition and put that $6 billion back in their pockets.”
The ad ends by asking listeners to call Congress and “tell Congressman Budd to stop being a pawn for the banks and protect swipe fee reform.”
The campaign will expand in the coming days into key congressional districts across the country and continue during the run-up to the House vote. The commercials will run several thousand times and are expected to be heard by tens of millions of listeners.
The campaign will also include full-page newspaper ads and online digital ads in some locations. In those ads, a shady character is seen taking money out of a consumer’s wallet while the headline asks, “What are the banks hiding when it comes to swipe fee reform?” Another line reads, “Don’t let big banks take your money.”
Debit reform was enacted as part of Dodd-Frank in response to the card industry’s practice of price-fixing the debit card “swipe” fees banks charge merchants to process transactions. The fees previously averaged 1% – 2% of the purchase amount, and virtually all banks that issue cards charged the same.
Under reform regulations that took effect in October 2011, large banks are limited to 22 cents per transaction, down from an average 45 cents in the past. The limit saved retailers about $8.5 billion in the first year alone, with close to $6 billion of the savings passed along to consumers, according to a study by Economist Robert Shapiro. Banks that set the fees competitively and independently are exempt from the limit, but virtually none have done so. Banks with under $10 billion in assets are also exempt.
Reform also required that merchants be given at least two choices in the networks that route debit transactions to the banks for processing, typically one controlled by Visa or MasterCard and a competing, independent network that can offer advantages such as lower fees, better service or better security.