by Alison Storm | 06/22/10

A push to limit swipe fees for merchants who accept credit cards is moving forward. According to the Washington Post, the House and Senate reached an agreement on an amendment that would ultimately limit the fees passed on to retailers by credit and debit card companies. Illinois Senator Richard Durbin presented an amendment that would make government-issued prepaid cards and reloadable prepaid cards exempt from the new law.

Vermont representative Peter Welch told the Washington Post in an email that the agreement "preserves key protections for the grocers, retailers and country store owners most affected by out-of-control swipe fees, while addressing legitimate concerns of the industry." At issue is the fact that the swipe fees, which typically run about one or two percent of the transaction, can wipe out a retailer's profits on small purchases.

Limiting swipe fees could save the federal government $40 million a year according to Congressional aides. But the financial industry says they rely on those fees. "The carve-outs made for government-run programs underscore our concerns about the harmful impact of this legislation to all card users," National Association of Federal Credit Unions President Fred Becker told the Washington Post in an e-mail. "In its current form, this legislation would still put credit unions at a severe disadvantage compared to large credit card issuers."

Credit card swipe fees totaled $19.7 billion last year and averaged 1.63 percent of each sale according to statistics reported by Business Week. “We continue to have concerns that the ultimate outcome of this legislation would be the passing of merchant acceptance costs to consumers at a time when Americans can least afford it,” MasterCard spokesman James Issokson said in an e-mailed statement to Business Week. Negotiations are expected to continue this week.