Just before the fourth of July weekend, we learned that the Court of Appeals for the Second Circuit ruled that the swipe fee settlement with Visa and MasterCard was "unreasonable and inadequate." This was a significant victory for our industry in that we joined the case opposing unfair swipe fees in 2006 as the only named plaintiff representing the restaurant industry. We participated with many of our co-plaintiffs in vigorously opposing the initial settlement when it was unveiled in 2012.
The court's ruling yesterday that the settlement was “unreasonable and inadequate” confirms what we knew: a flawed settlement would not have accomplished our goal of changing a broken swipe-fee marketplace. You can read our full statement here as the litigation continues.
On Capitol Hill, banks and card companies have renewed their efforts to repeal the debit swipe-fee reforms we achieved in Congress over six years ago. Under the so-called “Durbin Amendment” in the Dodd-Frank Consumer Protection and Wall Street Reform Act of 2010, the Federal Reserve was required to adopt regulations that would result in debit swipe fees that were “reasonable and proportional” to the actual cost of processing a transaction, not the percentages card companies wanted to charge. You will recall that our efforts resulted in "swipe fees" being reduced from 44 cents to approximately 24-27 cents.
We are engaged in a full-scale grassroots effort to protect these debit-fee reforms as House Financial Services Chairman Jeb Hensarling (R-Texas) and Congressman Randy Neugebauer (R-Texas) work to repeal them. We are asking members of Congress to NOT cosponsor Rep. Neugebauer’s bill to repeal swipe-fee reforms (H.R. 5465) and to remove the repeal of swipe-fee reforms from Chairman Hensarling’s Financial CHOICE Act.
Finally, the Federal Reserve is scheduled to review swipe-fee rates this fall. We are especially focused on bringing down these rates for small-ticket restaurants as this process unfolds.
We must fight vigorously to protect the reforms we achieved over the past six years. We are committed to protecting your bottom lines and the benefits for our industry and for consumers.
CEO, National Restaurant Association