Several center-right groups sent a letter to Congress on Monday urging legislators to support H.R. 3156 to repeal the Durbin Amendment, which caps the interchange or “swipe” fee—the amount a bank can charge a retailer to process a debit transaction.
Renewed criticism of the Durbin Amendment came after recent reports that some gas retailers were charging excessive price differentials for those consumers who paid with debit or credit card at the pump. While the price controls were intended to lower costs for merchants, who said that the savings would then be passed to consumers, there has been little evidence to support that claim.
“All you’re doing when you put in a price control is you’re forcing a company to pass on loss to the consumer in some way,” Barney Keller, the communications director of the Club for Growth, a conservative economic advocacy group party to the letter, said. “Whenever the government picks winners and losers in the private economy, there’s a loser.”
The groups urged lawmakers in the letter to avoid the implementation of price controls as a solution to economic problems.
“The solution here is not more regulation or political demagoguery,” the groups said in the letter. “The solution is the free market. Let banks, merchants, and payment card networks work out interchange fees in a system of free and voluntary exchange. Let consumers decide what products work best for them at what prices, and let competition and innovation (not politicians) drive them to the best products. Repealing the debit card interchange price caps entirely and getting the government out of the way is the only way to restore balance in this market.”