This is an archived article that was published on sltrib.com in 2011, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
When nations go to war, each claims that God is on their side. When rival business interests battle before Congress, each claims that they are on the consumer's side.
Today the banks and the retailers are in a knock-down, drag-out fight over the fees that banks charge stores, restaurants, gas stations, etc., when customers use a debit card to pay for their purchases. Each side claims, most sincerely, to be seeking the best outcome, not for their own managers and stockholders, but for their beloved customers.
Choosing sides in this fight between Uncle Moneybags and Daddy Warbucks is difficult. The only hope for the consumer, and for many a small business, is that Congress and the Federal Reserve might come to their rescue, with rules that regulate without strangling anyone.
Putting a standard retailer's tool to good use, Utah businesses ran full-page ads in Monday's Salt Lake Tribune and other newspapers slamming Utah's freshman Sen. Mike Lee for allegedly siding with the forces of evil (i.e. "Wall Street banks") and against Utah's small businesses.
But all Lee has done is cosponsor legislation that would delay for a year, or maybe two, a largely unknown provision in last year's financial industry overhaul law, the one that would cap the fees banks get for processing debit card transactions. Such a lid, maybe 12 cents per transaction, could cost the banks billions. Those fees now run an average of 44 cents a swipe, and add up to some $16 billion a year.
The stores say the higher costs of accepting debit card transactions would be passed along to the consumer in the form of higher prices. The banks say the lower profit of being stuck with fee limits would be passed along to the consumer in the form of higher prices for all other bank services.
The retailers have been blessed in their choice of an enemy. Siding with the industry that brought the global economy to its knees can be political poison. But the banks also have a point when they note that, without sufficient fees, the banks' extensive anti-fraud systems would suffer.
And that galls the banks no end, because storekeepers have already unloaded much of the large burden of dealing with bad checks and replaced it with a system where fraudulent debit card use is a cost to the banks.
Federal oversight of the way banks operate the debit card network, including reasonable limits on fees, is needed. A delay in the rules that were jammed into last year's law would be proper, if we can be sure that Lee, among others, can see past this clash of the titans and look out for the rest of us.