Swipe fee reform was badly needed

This is in response to Mr. Dauchy’s letter of Oct. 20 regarding the debit fees Bank of America and other larger financial institutions chose to inflict on their customers. While the Illinois Retail Merchants Association certainly agrees with his underlying sentiment of less government regulation, there are times when some government intervention becomes necessary — although it should always be a last resort. Sen. Dick Durbin’s swipe fee amendment to the Dodd-Frank bill was one of those times.

The large financial institutions, as well as VISA/Mastercard, have a virtual monopoly on the processing of credit and debit cards. They were (and still are on credit card transactions) charging exorbitant fees each time a debit card was swiped. These fees continue to increase annually and are presented to the retailer on a take-it-or-leave-it basis. Worse, the retailer was prohibited from revealing the fees to customers or providing discounts to customers who chose to use other payment methods. The retailer would have to be the bad guy and increase prices in order to pay the swipe fee.

Sen. Durbin should be praised for bringing transparency to the process and exposing the hidden tax banks were inflicting on customers and retailers alike through swipe fees. Now the banks are attempting to hold hostage their own customers, like Mr. Dauchy, in an effort to repeal swipe fees. Their effort should be rejected by everyone.

Illinois retailers large and small appreciate the efforts of Sen. Durbin and his colleagues on both sides of the aisle for passing the “swipe fee” reforms and bringing relief for retailers and customers.

Rob Karr

Senior vice president

Government & Member Relations

Illinois Retail Merchants Association