More than 200 state and national organizations representing consumers and merchants called on the Senate to reject S. 4570, the Secure Payments Act, which was introduced last week. Similar to legislation introduced in the House in March by Representative Blaine Luetkemeyer (R-Mo.), the bill would require the Fed to conduct an in-depth analysis of the impact of the proposal and issue a report to Congress before it could be enacted.

In essence, the legislation would delay the Federal Reserve’s proposal to reduce how much big banks are allowed to charge to process debit card transactions.

“Every day of further delay in the Fed’s consideration of its proposed rule means another day in which large card-issuing banks are deducting significantly more money out of debit transactions than is reasonable, proportional or allowable under the law Congress passed,” the groups said in a letter. “That is why financial industry trade associations are seeking to delay the Fed as long as possible from taking action to update its 2011 regulation—delay preserves what for them is an enormously lucrative status quo.”

The letter was signed by 218 groups ranging from consumer advocates to retail trade associations and sent to members of the Senate. Signers included the Merchants Payments Coalition and other national organizations along with state groups from every state and Puerto Rico.

The letter noted that the original February deadline for public comments on the proposal was delayed by 90 days at the request of the banking industry.

“There was ample time for any and all stakeholders to submit information and views to the Fed during the comment period and the Fed must and will take those comments under consideration,” the letter said. Budd’s bill would require a “second, duplicative study” of issues already raised in the comment process and “is a transparent effort to further delay what the Fed has identified as necessary revisions.”

Under regulations established in 2011, banks that have at least $10 billion in assets and follow rates centrally set by Visa and Mastercard can charge merchants swipe fees of no more than 21 cents per debit card transaction plus 1 cent for fraud prevention and 0.05% of the transaction amount for fraud loss recovery. A Fed proposal released last fall would lower the base amount to 14.4 cents and the amount for fraud loss to 0.04% but would increase the amount for fraud prevention to 1.3 cents. Going forward, the rate would be automatically updated every other year based on banks’ costs.

While merchants don’t want action on the proposal delayed, MPC said this May that it doesn’t go far enough. That’s because it would lower the amount banks can charge by less than a third even though banks’ average cost of processing a transaction has fallen by nearly 50% – from 7.7 cents before the current rate was set to 3.9 cents as of 2021.

Separately, NACS is advocating for the passage of the Credit Card Competition Act. Discover what you can do to help here.