US lawmakers have rejected a bill to delay the introduction of interchange fee caps on debit card payments, putting the skids under shares in Visa and Mastercard.
The Bill, filed by a bipartisan group of nine senators, called for a 15-month delay of the proposed Federal Reserve debit card rule. The US Senate voted down the proposal by 54-45, leaving the Bill six votes short of a majority.
The Federal Reserve now has the go-ahead to cap interchange fees at 12 cents a transaction, a move that is likely to save retailers up to $12 billion a year in surcharges.
News of the vote sent shares in Visa and Mastercard tumbling, and also hit the stocks of some of the largest US card issuing banks.
"It is stunning that the Senate chose to ignore every major banking regulator who warned that this rule could harm community banks and credit unions - and possibly even result in bank failures at a time when our country can least afford it," says Trish Wexler, spokesperson for the Electronic Payments Coalition. "Giant retailers may have protected their $12 billion windfall at the expense of small businesses and debit cardholders across America. But we will not give up the effort to protect debit card holders from the effects of this ill-conceived legislation."
But the vote was cheered by the retailer lobby, which called on the Fed to implement the fee caps as soon as possible.
Sandy Kennedy, president of the Retail Industry Leaders Association, says. "With this distraction now behind us, retailers await the Federal Reserve's final rules so they can begin implementing these reforms and saving consumers money."