Legislation on debit card fees that was to have taken effect in July had the intention of saving retailers billions of dollars that flow into banks' coffers.
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WASHINGTON — Rick Bohnen, a service station owner from Minneapolis, recently stood outside the Capitol South subway here, 1,100 miles from home. He wore what he called his "working man's tuxedo" — a gray shirt with his name stitched over the pocket, an ExxonMobil oil logo on the other side of his chest, and sleeves rolled up above the elbows.
Mr. Bohnen passed out free coffee to passers-by as they headed for the offices of the U.S. House of Representatives and Senate. He also gave away mugs that urged people to "Tell Congress to support commonsense swipe fee reform!"
Americans may have thought the debate about capping debit card fees was over after a law was passed last year that mandated limits. But there he stood, playing his small part in what remains a lobbying war between two colossi of political clout — banks and retailers.
Mr. Bohnen had welcomed the new law that restricts fees he must pay banks when his customers make purchases with debit cards.
So he let a national coalition of retailers send him to Washington to pass out freebies and visit Minnesota's congressional staff in behalf of "swipe fee" limits. Those limits are supposed to move billions of dollars from banking coffers to consumer pockets by cutting retailers' business costs.
"Last year, debit and credit card fees exceeded payroll as my biggest expense," said Mr. Bohnen, who operates two service stations in south Minneapolis and is president of the Minnesota Service Station & Convenience Store Association. "When you have [those fees] as your top expense, it says something has to be done."
But after 90 minutes at the subway stop, he realized the challenge ahead. As he worked, a group backed by banks and credit card companies arrived to give away doughnuts and expound a completely different point of view.
Last December, the Federal Reserve issued a rule that would cap swipe fees at 12 cents. Currently, the fees have no limit and average roughly 44 cents a transaction. Yet instead of moving toward a July implementation, bills in the House and the Senate propose to delay and study the swipe fee cap for up to two years, a move that opponents hope will kill it. Both bills await committee hearings.
"It's a bit of a civics lesson for me," said Terry Scully, the president of Target Corp.'s financial and retail services division. "There has definitely been a major battle between the banks and retailers over this."
Minnesota-based TCF Bank has taken the legal route, filing a federal lawsuit in South Dakota to block debit card limits. Since then, a major political campaign has emerged, punctuated by ad campaigns and big spending on Capitol Hill.
Federal records show that in the first quarter of 2011 — after the swipe fee limits were law — retailers, bankers, and credit-card companies collectively spent millions and perhaps more than $10 million lobbying Congress over how — or if — the debit card caps would apply.
Dueling ads demonize each side. Subway riders in Washington travel to and from work under placards that suggest that Congress' "$12 billion gift to giant retailers" could cost them their debit cards.
Price controls that reduce bank revenues by billions will make it harder for some banks to offer debit cards, said Trish Wexler, a spokesman for the Electronics Payment Coalition, a group of banks and credit card companies, which paid for the ads. "Why not slow down and study this?"
Ed Mierzwinski, a veteran consumer advocate with the Public Interest Research Group, disagreed, saying, "This has been studied to death."
The organization and many other consumer groups support the fee cap. Mr. Mierzwinski, who has worked on the debit and credit card fee issue for six years, said he doesn't know of anyone who has changed sides. But he believes he understands the banking industry's strategy. "Delay equals killing reform."
One key issue causing the delay: the question of whether swipe-fee limits hurt small community banks.
That is where opponents of caps have gained their greatest political traction. Caps now apply only to banks with more than $10 billion in assets.
But the Electronic Payments Coalition's Mr. Trexler insists that retailers will find a way to force consumers to use debit cards issued by big banks, taking crucial revenue from little banks.
"We have no ability to differentiate cards from big or small banks," replied Target's Mr. Scully.
Indeed, he added, to do so is against the law.