Durbin jabs banks as swipe fee fight persists

Durbin's jab marks the latest in one of the longest-running and most heated fights of the 112th Congress. The Durbin amendment was a late entry into the Dodd-Frank financial reform law that required the Federal Reserve to set caps on the amount of fees banks could charge merchants for swiping their debit cards. With billions of dollars at stake, the two industries were engaged in a knock-down, drag-out lobbying fight over the provision. The banking industry suffered a rare defeat last June, when a measure that would delay implementation of the caps was narrowly defeated in the Senate.

Since then, retailers and banks have not backed away from making their case on swipe fees.

Durbin's letter was a response to one Keating sent to Congressional leaders earlier this month, where he urged Congress to support a multibillion proposed settlement reached between card issuers Visa and Mastercard, as well as some of the nation's largest banks, and the retail community.

The antitrust settlement was announced in July, but has been the subject of grousing in the retail industry, which argues it preserves a flawed system and prevents merchants from bringing future legal action against Visa and Mastercard in the future.

Major retail lobbies, such as the Retail Industry Leaders Association and the National Retail Federation, have come out against the settlement.

Keating's letter was itself a response to complaints from the retail industry to Congress about the settlement and merchants' continued campaign to have Congress adopt further restrictions on swipe fees. While the Durbin amendment applies just to debit cards, retail groups have made clear they would like to see similar fee caps placed on credit cards as well.

"The proposed settlement does nothing to resolve the failures in the electronic payment market and continued Congressional involvement in these issues is imperative," wrote a number of retail groups to Congressional leaders earlier this month.

Keating responded in his letter by saying the settlement was proof that private parties were handling the matter themselves, adding there was no need for Congress to further inject themselves in the matter.

"We do not believe it is in the interest of policymakers or the consumers they represent to repeat the mistakes of the past by expanding price controls to more aspects of our economy," he wrote.