News

Visa reportedly offered interchange cuts for small merchants before Tester-Corker vote

June 21, 2011

Digital Transactions has obtained a copy of a letter reportedly from Visa Inc. chairman and chief executive Joseph W. Saunders to U.S. Sen. Joe Manchin, D-W. Va., offering to cut debit interchange by 35 percent for small merchants if the Senate delayed the pending regulations called for by the Durbin Amendment.

“We feel strongly that it is important to give the regulatory bodies additional time to assess the impact of the legislation,” the letter said. “This more thoughtful approach will result in a better solution for U.S. businesses and consumers. Therefore, we are willing to make a reduction of debit interchange to help small businesses, i.e., those with $10 million or less in total sales, upon passage of the Tester-Corker Debit Interchange Fee Reform Act. During the study period and until the new implementation date, Visa will lower by 35 percent the debit interchange rates applicable to transactions at small merchants, which make up more than 90 percent of all U.S. businesses. This will enable the rate adjustments intended by Congress to immediately benefit small businesses and not await the outcome of the study and regulation.”

According to Digital Transactions, it is unclear how many senators received the letter and what effect it had on the Tester-Corker vote. A delay measure needed 60 votes for the June 8 vote, and only received 54.

The Durbin Amendment, an addition to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, calls for a cap of 7 to 12 cents on most debit card swipe fees, a decline of about 80 percent from current levels. It also introduces competition by giving merchants a choice as to which debit network they process transactions over.

The Amendment is scheduled to take effect on July 21.