Senate Financial Reform Opposed By Credit Card And Banking Industry

The United States Senate passed the amended version of the federal financial reform. Many companies, unions and groups have raised concerns to the passing of the bill. The banking and credit card industries are also raising concerns to the bill.

The bill gives provision to create a Consumer Financial Protection Bureau which would watch over the working of credit cards and loans. The new amendments to the bill by Dick Durbin, Democrat of Illinois will give retailers the control of fees charged by credit card companies. The bill gives retailers the option to give customers who pay by cash, special discounts. “Passage of this amendment is a win for the public on both fronts.” He said.

“(The bill) will prevent the giant credit card companies from using anti-competitive practices, allow merchants to offer discounts to their customers and restore common sense and fairness to this broken system.” Durbin added.

Credit Card companies like MasterCard and Visa have said the bill reduces their income, thereby reducing rewards customers get for credit card transactions. “The amendment is a shrewd but cynical approach to getting American consumers to pay big-box merchants’ fair share for the benefits these merchants get from electronic payments,” said Noah Hanft of MasterCard.

Durbin’s version of the bill gives retailers the ability to fix the minimum price a transaction must reach to purchase with a credit card. The current agreement between credit card companies and retailers does not allow retailers to choose that price. Merchant organizations have appealed to congress saying small transaction with credit cards take away the profit margin of retailers.

Visa said that the bill would be a hindrance to consumers who purchase low priced items with credit cards. “This could be especially devastating for those on a fixed income who rely on prepaid cards for government disbursements such as social security,” Visa said.

“By requiring debit card fees to be reasonable, and by cleaning up Visa’s and MasterCard’s worst abuses, small businesses and their customers will be able to keep more of their own money. Making sure small businesses can grow and prosper is vital to putting our country back on solid economic footing.” Dick Durbin stated after the Senate approved his bill.

The American Bankers Association has said the new bill will affect credit reports and credit scores and will prevent customers from getting ample credit. The President of the ABA, Edward Yingling supported change in the system but said the conditions under the new bill will harm consumers.