First introduced in 2016, the Financial Choice Act, H.R. 5983, seeks to make changes to Dodd-Frank including the interchange fee (“swipe fees”) limits that our industry fought so hard for in 2010.
From the 1990s until Congress passed debit-card swipe-fee reform in 2010, the cost of debit-card acceptance for restaurants and other merchants increased exponentially, from nothing per transaction to an average of 44 cents per transaction – an increase of over 4,000 percent.
Congress’ 2010 reforms require debit-card interchange fees to be reasonable and proportional to a bank’s costs of processing a transaction. The Federal Reserve in 2011 defined a “reasonable and proportional” debit-card swipe fee as up to 21 cents per transaction, plus .05 percent of the transaction amount, plus an additional 1 cent for fraud prevention.
While the Federal Reserve set the rates higher than expected, setting interchange limits has been beneficial to our industry. We are concerned that some of our friends in Congress want to roll back this particular provision of Dodd-Frank.