In a rather surprising move to the industry and some Wall Street analyst, the Senate voted 64 to 33, passing an amendment by Senator Richard Durbin of Illinois to curb fees imposed by VISA and MasterCard on debit card “swipe” fees. Though the bill still needs to be passed by the House and signed by President Obama to become law, with support from 17 Republicans joining dozens of Democrats, the bill will most likely receive similar reception from the House of Representatives.
Here’s how the proposed changes may impact you:
1. Retailers are now allowed to offer discounts for cash, checks, debit cards, or even discounts for a lower card brand.
For example, if a retailer receives less fees on a certain card brand (Discover card vs. VISA card), they can pass the savings onto the customer. Retailers can also offer cash discount if you pay for things with cash (much like many gas stations in certain parts of the country do).
2. Retailers can now set minimums and maximums for credit-card purchases.
Remember seeing those “$10 minimum credit card purchase” signs? Merchants are now allowed to set minimums and maximums to credit card transactions, depending on their preference, without fear of violating VISA or MasterCard’s terms and agreements.
Perhaps non-surprising, VISA and MasterCard have responded negatively to regulation of swipe fees. In a released statement, Visa says that they are “disappointed” by the bill’s passage. “We’re hopeful that when the issue is fully reviewed by members of Congress during the next phase of negotiations, they will conclude the amendment harms consumers, credit unions and community banks and should be eliminated from the bill.”
“The Durbin amendment would give lobbyists for big retailers what they have been unable to achieve through other efforts — the ability to maintain all the benefits they receive from debit-card acceptance while transferring the cost to consumers,” MasterCard said in a statement.
VISA (V) and MasterCard (MA) shares were hit hard on the market today. As of writing, shares for Visa are down $8, or 9.33 percent to $77.73, while MasterCard’s shares fell by $19.24, or 8.28% to $213.07. Shares of Capital One, American Express, and Discover were also impacted negatively by the bill’s passage.