Magazine article American Banker

Durbin Seeks to Beef Up Small-Bank Interchange Exemption

Magazine article American Banker

Durbin Seeks to Beef Up Small-Bank Interchange Exemption

Article excerpt

Byline: Kevin Wack

WASHINGTON a Sen. Dick Durbin is working behind the scenes on a new effort to ensure that small banks are not being hurt by the cap on debit interchange fees.

The Illinois Democrat was the driving force behind last year's legislative provision that required the Federal Reserve Board to cap the fees that banks charge retailers on debit-card transactions.

Although the bill contained an exception for banks with under $10 billion of assets, both industry officials and regulators have argued small banks will still be adversely affected. Under one oft-cited example, Visa and Mastercard may be unwilling to operate a two-tiered system, one for large banks and one for small banks.

"There is good reason to be concerned about it," Fed Chairman Ben Bernanke said at a Senate hearing in May.

Now, Durbin has inserted language into a larger measure a which is expected to be adopted by the Senate by next week a that instructs the Federal Trade Commission to issue a report on how the small-bank exemption is working.

The FTC's report, which would be issued in late 2012, would explain whether FTC has found evidence that payment card network companies such as Visa and Mastercard have taken steps to make it harder for small banks to compete in the debit-card market with large banks. The report would also explore whether the payment card network companies have coordinated or colluded with large banks in an effort to put small banks at a disadvantage. …

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