The House Financial Services Committee approved the Financial CHOICE Act, Chairman Jeb Hensarling’s (R-Texas) bill intended to overhaul the Dodd-Frank Act. The bill, which now moves to the House floor for consideration, would repeal the Durbin Amendment if ultimately passed.
Like the 2016 version of the bill, the revised CHOICE Act would repeal the full text of Durbin. As the Merchant Advisory Group (MAG) noted in March, this would eliminate:
- Limitations on debit interchange pricing for issuers with over $10 billion in assets who refuse to negotiate rates outside of the Visa and MasterCard fee schedule
- Merchant choice over debit transaction routing services, which includes a mandate that issuers enable two or more unaffiliated networks for every debit product
- Protections from card network acceptance rules and fines if merchants offer discounts for debit, cash or checks, or set a minimum of $10 or less for credit card usage in stores.
House Republicans likely have the votes needed to pass the CHOICE Act without support from Democrats. However, it is possible that all or some of the Durbin repeal could be removed during the Rules Committee process, the MAG explained. Should the repeal language remain intact, there will likely be an amendment on the House floor to strip it from the bill, but there is no guarantee that House leadership would even allow such a vote to take place.
If the bill does clear the House, it would need Democratic support to receive the 60 votes needed to pass in the Senate. According to House Financial Services ranking Democrat Maxine Waters (D-Calif.) the bill is “dead on arrival in the Senate” and “has no chance of becoming law.”
Furthermore, Democrats like Sen. Elizabeth Warren (D-Mass.) and Sen. Sherrod Brown (D-Ohio) have already voiced their opposition to the bill. Brown and Banking Chairman Sen. Mike Crapo (R-Idaho) are currently working on bipartisan legislation.
In the meantime, the MAG advised retailers that it is a “long, slow slog” for any repeal language to become law, and should changes be enacted, it is unlikely that they will be effective immediately. Any direct fee structure impacts are unlikely this year, however, some networks could feel emboldened by the prospect of Durbin being repealed and could increase network fees.
The potential for a Durbin repeal is sure be a major topic of discussion during next week’s AFP Retail Roundtable in Nashville, Tenn.