Tuesday June 07, 2011 | 03:02 PM
Sen. Olympia Snowe is leaning against a measure putting a hold on lower debit card “swipe” fees.
Sen. Susan Collins is still examining the push by banks to put a law capping the fees merchants pay on hold before it goes in effect in a few weeks, but notes that while banks have some legitimate concerns, current fees represents a major cost for small businesses.
The Maine Republicans are two of the senators being lobbied by both sides in a battle between merchants and retailers and banks over a limit on debit card interchange, or swipe, fees that was put in place by a broader Wall Street financial regulation reform bill passed last year, legislation that Collins and Snowe both backed.
Retailers say major banks are making billions of dollars in profits, and that while a debit transaction costs only 4 cents to process, merchants are being charged on average 44 cents a transaction.
That fee could be capped to about 12 cents per transaction, according to rules the Federal Reserve has proposed for when the swipe fee overhaul goes into effect on July 21.
But a lobby group representing the banks says Collins and Snowe should vote to put the lower fees on hold while the issue is studied further, asserting that smaller and community banks could be hurt and that consumers would not see any savings, just the retailers. The banks say an exemption for smaller banks would not work, because while the smaller banks could charge higher fees retailers might choose not to take those debit cards, and the banks also charge that much of the money they derive from swipe fees goes into consumer security measures.
Snowe said in an interview on Capitol Hill today that she has talked to numerous Maine retailers and merchants about the issue, including to one Maine merchant who told her that on $400,000 in revenues he paid out $93,000 in debit card fees.
“I am still considering all the issues, but at this point I think it’s important to underscore the concerns of the merchants as well in this whole effort. It has really been a major cost of doing business,” Snowe said.
Noting that she voted for the original legislation capping the fees, Snowe said, “I haven’t seen anything to suggest at this point for me to move in a different direction.”
Collins “supports the regulation of interchange fees,” her spokesman said this week. “There is a lack of transparency in how these fees are set, and they are a major cost for many small business owners in Maine.”
At the same time, Collins “also believes that there are legitimate concerns about how small community banks and credit unions will be affected and that the Federal Reserve has been struggling to implement the law,” Collins’ spokesman Kevin Kelley said.
Collins told reporters on Capitol Hill today that while she will “take a look” at the proposal to put a hold on the new law, pending a study of its impact, but is against an initial proposal for a two-year suspension “because I think that’s an attempt to just kill interchange fees (reform) altogether.”
Told that the authors of the proposed hold, Sens. Jon Tester, D-Montana, and Bob Corker, R-Tenn., had just moved the hold period from two years to 15 months to a year, Collins said, “It’s a moving target. Until I see what the specifics are, I can’t make a decision.”
A vote on the proposed hold could come in the Senate this week.
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