Durbin Commends Ruling That Upholds The Illinois Interchange Fee Prohibition Act
The ruling is consistent with a Durbin amicus brief that was filed in the District Court for the Northern District of Illinois laying out the structure of the Durbin Amendment, which aligns with IFPA
WASHINGTON – U.S. Senate Democratic Whip Dick Durbin (D-IL), Ranking Member of the Senate Judiciary Committee and lead sponsor of the Credit Card Competition Act and the Durbin Amendment, released the following statement after a federal judge ruled against the banks in Illinois Bankers Association v. Raoul, a lawsuit brought by the banks to prevent the Illinois Interchange Fee Prohibition Act (IFPA) from taking effect. In the ruling, Chief Judge Virginia Kendall agreed with the arguments in the amicus brief filed by Durbin, which lays out the structure of the so-called Durbin Amendment, which aligns with IFPA.
Durbin’s amicus brief describes how IFPA is consistent with the Durbin Amendment’s intent. The Durbin Amendment created a ceiling—not a uniform standard—for debit interchange fees that card networks like Visa and Mastercard were facilitating on behalf of financial institutions that issued their network-branded cards. By imposing such constraints, the Durbin Amendment sought to reduce the billions of dollars per year in excessive debit interchange fees that were being charged to merchants, and which were borne ultimately by consumers in the form of higher retail prices.
“Yesterday’s ruling was a win for merchants and consumers who are trying to make ends meet as the biggest Wall Street banks, Visa, and Mastercard are lining their pockets by charging outrageous swipe fees on each credit card transaction. I’m also pleased that, after 16 years, the Durbin Amendment was interpreted correctly in the ruling. Both IFPA and the Durbin Amendment’s purpose is to rein in centrally-fixed debit interchange fees that had been insulated from competitive market forces and resulted in excessively high fees that burdened merchants and consumers.”
In Congress, Durbin has made it a priority to protect consumers. Durbin’s Credit Card Competition Act would direct the Federal Reserve to ensure that the largest credit card-issuing banks offer a choice of at least two networks over which an electronic credit transaction may be processed. Today, Visa and Mastercard control about 85 percent of the credit card market and refuse to negotiate fair terms with Main Street merchants. Currently, the average American family pays nearly $1,200 per year in swipe fees, while banks profit $111.2 billion annually from swipe fees.
The legislation, co-led by U.S. Senator Roger Marshall, M.D. (R-KS), was reintroduced last month, and President Trump has endorsed the legislation.
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