Swipe fee fight bristling with lobbyists

John Dimsdale May 3, 2011
HTML EMBED:
COPY

Swipe fee fight bristling with lobbyists

John Dimsdale May 3, 2011
HTML EMBED:
COPY

Jeremy Hobson: Well members of Congress are back in Washington this week. And Osama bin Laden’s death aside, lawmakers have some big issues to deal with — from budgets to deficits to gas prices.

And then there’s an issue that doesn’t seem all that big in comparison. But its getting a lot of attention in Congress because of a huge lobbying campaign by banks and retailers. I’m talking about the new federal regulations on swipe fees for debit cards.

Our Washington Bureau Chief John Dimsdale explains.


John Dimsdale: At Congress’s request, the Federal Reserve is proposing to limit the fees banks charge merchants when customers swipe their debit cards.

James Angel: There’s a lot of money on the line here.

That’s Georgetown University finance professor James Angel. He says nothing focuses the mind like the $14 billion that the regulation could swipe away. So banks have hired more than a hundred lobbyists to persuade Congress to scrap the limits on debit card charges — income they say subsidizes other bank services.

Angel: The banks are going, we have to charge more for checking accounts.

The banks have attracted some surprising allies, says George Mason University professor Todd Zywicki.

Todd Zywicki: Groups like the NAACP have noted that if you start getting rid of free checking, that’s going to drive a lot of people out of the banking system.

Meantime, the 100-plus lobbyists for retailers say caps on debit card fees mean cheaper prices in stores. Either way, consumers will have to pay up.

In Washington, I’m John Dimsdale for Marketplace.

We’re here to help you navigate this changed world and economy.

Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.

In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.

Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.