Zach Carter and Ryan Grim cover a lobbying feeding frenzy on an issue of concern to many merchants – debit interchange rates.  They report Congress is considering a bill pushed by banks to delay implementation of the Durbin Amendment, which would mandate lower interchange rates for debit cards. 

The Durbin Amendment requires the Federal Reserve to ensure that interchange rates for debit transactions are “reasonable and proportional.”  Several months ago, the Fed published a rule that would do just that, by limiting debit interchange fees to about 7-12 cents per transaction, down from the current average of 44 cents per transaction.

As Sean has pointed out, this rule would allocate rents from debit transactions away from banks, which would benefit merchants.  Needless to say, banks are not happy, and when banks aren’t happy with Congress, they hire loads and loads of lobbyists. But this time, the banks are up against Walmart, Home Depot and other huge merchants, who are no lobbying slouches themselves.  The result, Carter and Grim report, is a sordid Congressional push and pull as banks and merchants try to sway Congresscritters to their side of the “debate.”  Its almost a little funny to read about the congressional agita over which of their big-money benefactors to favor.

What can small merchants do?  It does appear that Congress is genuinely split on these issues, and it might be worth it to make a quick call to your Congressperson to express your support of the Durbin Amendment and opposition to any bank efforts to delay implementation of the Fed’s rule. 

Image courtesy of Meaningless Guy