NEW YORK (AP) — Pending regulations that would sharply cut the fees merchants must pay banks for processing debit card transactions have weighed on Visa Inc. shares for several months.
The rules, proposed by the Federal Reserve in December as required under last summer’s financial regulatory overhaul, are opposed by large and small banks, which maintain the government did not consider all of the costs associated with payments made using debit cards.
During a conference call to discuss Visa’s fiscal first-quarter results, Chairman and CEO Joseph Saunders said the rules as proposed amount to government price fixing that benefits no one.
“The debit price control legislation is bad policy and requires thorough review and revision before potential implementation,” he said. “To that end we’re working with the entire industry to help the 112th Congress and the Federal Reserve better understand how the provisions create significant unintended consequences that will harm consumers, the economy, and financial institutions of all sizes, even if those institutions were supposedly exempt from the regulation.”
Saunders said Congress should re-examine the part of the law that calls for debit fees to be regulated, and delay implementation to more carefully consider the impact. “As we have seen, the more this issue is debated, the more questions are raised about who will really benefit in the end.”
Q. Can you give us your sense of whether there is truly a genuine effort within Congress to pursue legislation that would actually change the language of the law? And absent that type of legislation, do you feel that the public comment period and lobbying by various folks on the hill would be enough to try and make the final version of the rules much less onerous on the industry than the initial proposals?
A. (Visa CEO Joseph Saunders): Well, I learned in November and December that it is foolish to try to predict exactly what Congress will or will not do. I don’t think that dialoguing with the Fed, or sending opinions to the Fed or commenting to the Fed about what’s already out there is over. I don’t necessarily believe that some things can’t be changed.
Our position is that the enactment of this legislation should be delayed and the unintended consequences should be studied. And Congress should require some action predicated on the findings of that study.
Leave a Reply