WASHINGTON — Striking at a lucrative bank business, the Senate on Thursday voted to force credit card companies to reduce fees for debit card transactions and permit merchants to offer customer discounts based on their payment method.
The 64-33 vote inserted the fee requirement in a package of new financial rules the Senate is considering to ward off a repeat of the financial crisis.
The vote was a major defeat for banks, which lobbied hard against it. But the measure attracted heavy bipartisan support and surpassed a 60-vote threshold for passage. Seventeen Republicans voted for the amendment, including Maine Sens. Olympia Snowe and Susan Collins; 10 Democrats voted against it.
The measure from Sen. Richard Durbin, D-Ill., would force credit card companies to charge businesses less for debit card transactions than for credit card payments. Under current practice, a business that accepts major credit cards signs agreements with the card companies to pay a percentage of each transaction, usually about 2 percent to 3 percent. But credit card charges cost more to process than swipes with a debit card.
Durbin’s measure requires that once merchants can pay lower fees for debit card purchases, they then would be able to offer discounts to their customers based on their method of payment. Merchants would be prohibited from placing minimum purchase requirements for the use of a debit card.
“To bring competition to credit cards is going to help these businesses and ultimately help consumers,” Durbin said.
Retail groups countered that any reductions in fees would be passed on to consumers. Henry Armour, president and CEO of the National Association of Convenience Stores, said credit and debit card fees are the second biggest expense in his industry, behind labor costs.
The measure still needs to survive negotiations with the House, which has already passed its version of regulations on Wall Street. The House bill does not contain the debit card provision.
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