It would be a "serious mistake" to conclude that the July interchange fee litigation settlement between the card industry and retailers will put to rest congressional involvement in the issues surrounding payments system, Sen. Richard Durbin (D-Ill.) said yesterday in a letter to ABA President and CEO Frank Keating.
Durbin was responding to Keating's letter last week urging Congress to end the debate over interchange fees and financial support of the payments system by rejecting calls from some retail groups to impose even more government price controls that hurt consumers.
Keating noted that the Retail Industry Leaders Association said the settlement, which provides more than $7.2 billion in payments to about 7 million merchants, was not enough, and it implored Congress to impose further price controls.
Durbin, in essence, agreed with the retailers. "If this proposed settlement is finalized, millions ... whose interests were not represented in the secret settlement negotiations would be negatively impacted," he said. "Adoption of this proposed settlement would almost certainly guarantee that future congressional intervention will be necessary ... ."
Durbin added—without citing any evidence—that small banks and credit unions "have thrived" since his amendment took effect. Many consumers also have received discounts for buying products with their debit cards, and have benefited from merchants keeping prices down because of lower interchange costs, he said.
Read Durbin’s letter.
Read Keating's letter.