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The country’s banks are waking up today with a $15 billion hangover.
The US Senate yesterday swatted aside a move backed by New York Democrats Chuck Schumer and Kirsten Gillibrand to delay implementation of an 80 percent cut to the debit-card swipe fee — a move that will drain up to $1.3 billion a month, or $15 billion a year from banks’ coffers.
A dramatic 54-45 vote capped six months of legal arm-twisting and intense lobbying from both the banking sector, which supported the delay, and retailers, which pushed for the new cap, and paved the way for a cut from 63 cents to 12 cents in the fee stores pay banks for each debit card purchase, starting July 21.
The pro-delay contingent, led by Jon Tester (D-Mont.) and backed by the major US banks, needed 60 votes to get the measure adopted.
“This is a landmark victory for American consumers that will give them the break from skyrocketing swipe fees that they have been seeking for years,” said Matthew Shay, CEO of the National Retail Federation.
Rachel Wolf, a spokeswoman for the Merchants Payments Coalition echoed Shay’s sentiments.
“For nearly a decade, the country’s biggest banks and credit card companies have worked tirelessly against these long-awaited reforms, and Main Street has finally prevailed,” Wolf said.
On the other side, one bank lobbyist was vowing not to give up the fight.
“We will continue to push hard for relief from this ill-conceived law, said Frank Keating CEO of the American Banker’s Association, a lobbying group.
Banks claim they need the higher fee to cover the cost of fraud protection. Retailers claim they can pass along the savings from lower fees in the form of lower prices.
Nixing a vote to delay implementing the new rules marked a big victory for Sen. Dick Durbin (D-Ill.), who authored the original swipe fee bill and fought through a bare-knuckle lobbying effort by the banking industry to keep his sup porters together.
Banks are still hopeful that a similar delay mea sure could be presented in the House, sources said. Others claim such a move is unlikely.
Shares of MasterCard and Visa dropped after the Senate vote was tallied, as investors feared their profits could be trimmed because of lower debit-card fee revenue.
Visa’s stock plummeted 3.5 percent to $76.71 while MasterCard shares fell 1.5 percent to close at $270.
Meanwhile, bank stocks took a hit, with JPMorgan Chase falling nearly 1 percent to $40.39, and Wells Fargo down 1.6 percent to $25.36 after trading higher prior to the 2 p.m. vote.