National Restaurant Association: Swipe Fee Reforms Have Been Critical for Small Businesses, Consumers

A year after a bipartisan majority of Senators stood up to protect debit swipe fee reforms, the National Restaurant Association today noted those reforms have provided important benefits to restaurateurs and their customers. America’s restaurant industry is the nation’s second-largest private sector employer, and more than 90 percent of restaurants are small businesses.

“Congress passed critical legislation to help bring transparency and competition to a broken debit card market, and ensure that merchants pay reasonable and proportional debit card fees as opposed to the skyrocketing levels they had faced for the better part of the last decade,” said Scott DeFife, Executive Vice President of Policy and Government Affairs for the National Restaurant Association. “We appreciate the strong bipartisan group of Members of Congress who supported the initial reforms in the Wall Street reform law, and thank those Senators who continued to help fight back efforts last year to delay, alter, and repeal those reforms. The reforms are working.”

On June 8, 2011, a bipartisan Senate beat back a proposal that would have delayed, and ultimately killed, the Durbin Amendment, which had been included in the Dodd-Frank financial services reform bill Congress passed in 2010. The Durbin Amendment charged the Federal Reserve with ensuring that debit-card fees are “reasonable and proportional” to the cost of processing transactions. Congress acted after years of complaints from the National Restaurant Association and other merchant groups about uncontrollable and rising interchange swipe fees for their members.

Following the June 2011 Senate vote, the Federal Reserve moved to cap swipe fees that merchants pay for debit-card transactions at 21 cents per transaction – less than the average 44 cents that merchants previously paid for debit-card transactions, but a significant increase over the 7- to 12-cent swipe-fee cap that the Federal Reserve first proposed.

DeFife added that the Federal Reserve’s misinterpretation of the law and its final rule provided the signature debit networks – Visa and MasterCard – latitude to drastically increase small tickets rates to the detriment of quick service restaurants and other small businesses with average low ticket sales. The National Restaurant Association, along with other merchant plaintiffs, is challenging the Fed’s final rule.

“What we’ve seen happen to small ticket rates is evidence that still more much transparency and competition is needed not just in the debit card market, but also for credit cards and new emerging payments like mobile,” DeFife said. “In addition, as an industry that relies on the health of small banks and credit unions in communities across the nation, we are pleased with the early reports from the Federal Reserve that show exempt institutions – those with less than $10 billion in assets – are doing just fine despite concerns that were raised during this debate last year. The National Restaurant Association will continue our work to educate policymakers and regulators on the need for additional reforms and vigilance in this area.”

Founded in 1919, the National Restaurant Association is the leading business association for the restaurant industry, which comprises 960,000 restaurant and foodservice outlets and a workforce of nearly 13 million employees. Together with the National Restaurant Association Educational Foundation, the Association works to lead America’s restaurant industry into a new era of prosperity, prominence, and participation, enhancing the quality of life for all we serve. For more information, visit our Web site at