Sen. Brown Stands Up for Consumers By Voting to Maintain Protection Against Debit Card "Swipe Fees"

Protection Supported by Ohio Retailers Would Help Small Businesses by Reducing Swipe Fees they Pay on Debit Cards

WASHINGTON D.C. – U.S. Sen. Sherrod Brown (D-OH), chairman of the Senate Banking Subcommittee on Financial Institutions and Consumer Protection, today stood up for Ohio consumers and small businesses by voting to maintain a new protection that would limit “swipe fees” charged on debit card purchases. Nearly $17 billion in these debit card fees were charged to small businesses and retailers in 2009—fees that are often passed along to the consumer in the form of higher prices.

“Every time Ohioans use a debit card to fill their gas tanks or pay for their groceries, they pay higher prices because retailers are charged excessive swipe fees,” Brown said. “These fees cut into the already-tight profits for small businesses across Ohio, and add to the costs of purchases.”

Today’s vote was on an amendment that would delay and possibly derail the current effort by the Federal Reserve to cap swipe fees at the actual cost of a transaction. Under current law, the Federal Reserve will begin limiting swipe fees starting on July 21 so that they are “reasonable and proportional.”

Brown spoke with leaders from Ohio banks, credit unions, small businesses, and retailers in advance of today’s vote.

“While this amendment sought to protect consumers, it was telling that any voice for consumers, such as the Consumer Financial Protection Bureau or the Federal Trade Commission, was excluded from the review process,” Brown added. 

“Although the amendment considered today did not strike the right balance between the needs of financial institutions, small businesses, and consumers, this issue will not be going away,” Brown continued. “Once the Federal Reserve issues its regulation, we can assess whether additional changes are needed.  As a member of the Senate Banking Committee, I will continue to monitor the concerns raised by Ohio’s banking and credit union communities.”

Brown fought for the debit card swipe fee protection during debate of Wall Street reform. When Brown announced his support for the provision, he was joined by Tony Kenny, President of Speedway SuperAmerica—which has more than 440 locations in Ohio and is headquartered in Enon, Ohio—as well as Stephanie Skylar, President & CEO of Chief Super Market, Inc., which operates 13 stores in Northwest and West-Central Ohio. Ohio convenience stores paid more than $341 million in interchange fees in 2008.

“Credit card fees are hidden to our customers and have increased at a double digit annual compound growth rate during the past decade. We expect that our petition campaign will carry more customer voices to Congress demanding that they address the problem of credit card swipe fees,” Kenney said in 2010.

“Interchange swipe fees are one of the highest operating costs we face, and as a 1-2% profit margin business, any reduction in these fees will be a true win for small businesses and consumers. We operate 12 grocery stores in Northwest Ohio. If fees were reduced, our business would have more funds to invest back into the business to hire more workers, invest in improvements, and provide greater benefits to our customers. I look forward to the ultimate passage of this legislation,” Skylar said in 2010.

The provision, which passed with bipartisan support in a vote of 64-33 in 2010:

  • Prevents Visa and MasterCard from continuing to increase debit card interchange fee rates, which are currently 1–2 percent of the transaction amount even though the actual cost of processing a debit transaction is far less.  
  • Directs the Federal Reserve to issue regulations by July 21, 2011, to ensure that interchange fees imposed on debit card transactions would be “reasonable and proportional” to the cost incurred in processing the transaction. (The rules would have a carve-out for small bank and credit union debit cards).
  • Stops Visa and MasterCard from raising debit interchange fees simply because their market power means that merchants can do little to fight back. Reducing debit interchange fees would be like a tax break on every debit card sale a merchant makes. 


Interchange rates in the U.S. are the highest in the world and Visa and MasterCard continue to raise domestic interchange rates.


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