US House and Senate near interchange deal

US House and Senate near interchange deal

The US House of Representatives looks set to accept plans by Senator Richard Durbin to curb debit card interchange fees but only after a tweak in his amendment which protects Visa and MasterCard.

Durbin's amendment was backed 64 - 33 in the Senate last month, giving the Fed powers to regulate debit card interchange fees.

The Illinois Senator now says key House of Representative conferees have agreed to his proposals with "minor, clarifying changes to the language".

These changes include a major victory for MasterCard and Visa, with the definition of "interchange transaction fee" altered, meaning the Fed cannot regulate the network fees they charge banks.

The news saw Visa shares close up five per cent at $80.90 and MasterCard up 4.2 per cent at $223.34 yesterday.

Another compromise sees federal, state and local government programme debit and pre-paid cards exempted from the interchange regulation. Banks with assets of under $10 billion are also exempt.

The Senator says he now expects the House and Senate to pass the final legislation before 4 July.

Says Durbin: "I'm pleased that we were able to reach an agreement which makes modifications which strengthen consumer protections and bring competition to a market where there is none."

However, the electronic Payments Coalition reacted furiously to the news, issuing a statement saying: "Consumers will pay higher fees, lose rewards programs, and have limited choices for debit cards due to the disruption this amendment will bring to the economics of the debit card market. We will continue to fight to ensure that retailers do not succeed in their decade-long lobbying campaign to shift the cost of what they pay to accept cards onto the backs of consumers."

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