The Talk of the Town

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The Talk of the Town

Aug 03, 2010
Posted by Rosemary Hambright - As the current summer intern at NASE’s Advocacy and Communications Office in D.C., I was privileged to be asked to attend a House Small Business Committee’s Subcommittee hearing and summarize the discourse in a write-up for NASE’s Washington Watch last Thursday, July 29. 

After Molly Nelson, NASE’s Communications Associate and the BEST guide in the District, dropped me off at room 2360 of the Rayburn House Office Building, I was soon filing in between some rather important looking men and women.  The title of the hearing—“The Impact of Interchange Fees on Small Business”—was perhaps of more interest than the Subcommittee on Investigations and Oversight anticipated, since seating soon filled up and people stood in the aisles.

So why was the topic the source of so much curiosity?  Well, the Wall Street Reform that President Obama signed into law on July 21 contains the Durbin Amendment.  The Amendment takes the control of setting the price of interchange fees, the cost of the service of processing debit card transactions, out of debit card providers’ hands and gives it to the Federal Reserve with the provision that the fees must be “reasonable and proportional” to the total amount of each transaction.

The Durbin Amendment should relieve small businesses of some of the burden of paying the fees which, according to Subcommittee Chairman Rep. Jason Altmire (D-Pa.), are currently between two and three percent of each transaction.  That percentage may seem like a small amount, but taken out of multiple interchanges over a period of time it can add up alarmingly fast and represent a significant chunk of a small business’ revenue. 

Interestingly, a small business owner acting as a witness at the hearing pointed out that the Durbin Amendment will affect businesses differently across industries.  For example, convenient stores have reported a surge in purchases made with a credit or debit card over the past few years, whereas customers increasingly use checks and cash to pay for pizza deliveries. 

The bank and credit union representatives concluded that consumers will bear the weight of any changes in the price of transaction fees and that community banks, in turn, will be at a significant disadvantage.

Doubtless, my first hearing was also the first in a long line of debate to come.

For more information on interchange fees, please visit:

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