Recently elected National Association for Convenience Stores (NACS) Chairman Rahim Budwani is a fan of the impact Dodd-Frank Act has had on the retail industry, particularly its reforms regarding swipe fees that he feels are beneficial to the retail stores.
And he says he’ll defend the Dodd-Frank Act from legislative challenges to weaken it in order to keep Durbin Amendment swipe fee regulations in place.
In an op-ed for the Birmingham Business Journal, titled “Don’t take away debit reform,” Budwani said banks make more money from a chain of eight convenience stores in Alabama than the owner of the chain thanks to “transaction fees related to debit card usage.”
Legislation in the Dodd-Frank Act outlined a mandate for “reasonable fees and rules for payment card transactions.” That legislation helped to usher in an era of increased competition for such fees, which benefited small business owners such as Budwani, CEO of 6040 LLC. He pointed out that swipe fees account for the second-largest operating cost for many businesses, including his, with rent being the largest.
According to Section 920 of the Consumer Financial Protection Act, the CFPB “may prescribe regulations, pursuant to section 553 of title 5, United States Code, regarding any interchange transaction fee that an issuer may receive or charge with respect to an electronic debit transaction, to implement this subsection (including related definitions), and to prevent circumvention or evasion of this subsection.”
The same section of the act went on to address reasonable interchange transaction fees, stating, “The amount of any interchange transaction fee that an issuer may receive or charge with respect to an electronic debit transaction shall be reasonable and proportional to the cost incurred by the issuer with respect to the transaction.”
Budwani is staunchly opposed to repealing Dodd-Frank reforms related to transaction fees as proposed in Rep. Jeb Hensarling’s (R-Texas) bill, dubbed the Financial Choice Act, which repeals the Durbin Amendment, which addressed the issue of swipe fees.
“Repealing debit reform would be bad for businesses like mine and bad for our customers — who will ultimately pay a lot for it if the bankers get their way,” Budwani said in the op-ed. “Even with debit reform, American merchants and their customers pay the highest swipe fees by far in the industrialized world. This makes no sense. With good technology and a huge volume of transactions here, the U.S. market should be about the cheapest in the world.”
Budwani concluded the op-ed by saying that “[r]epealing debit reform would be a return to price-fixing by Visa and MasterCard and it would hurt consumers and Main Street businesses.”
NACS supports the stoppage of the Financial Choice Act bill “so long as the debit reform repeal is in it,” according to a press release. Lyle Beckwith, NACS senior vice president of government relations, is urging Congress and the Senate to “recognize the success of this vital reform in re-establishing competition in the debit-card market.”
NACS asserted in another press release that such a repeal of debit reform “would allow unlimited price-fixing of fees and let the credit card giants block their competitors from having a chance to try to get business from merchants.
“According to a report by the Merchants Payments Coalition, reductions in debit fees driven by swipe fee reform put nearly $6 billion in consumers’ hands through lower prices in the first year of reform alone and supported more than 37,000 new jobs annually. In addition, small merchants have benefited from greater transparency in debit-card transactions.”