I swear I’m done with this metaphor after this.
Senator Durbin has fired back at Parkmobile over their Dodd-Frank posturing. It brings us to a point in the discussion where everyone gets to be right, maybe, depending on what your perspective is.
Durbin accurately states in his letter, below, that the Durbin amendment only addressed debit card fees. He also states, sort-of correctly, that it didn’t cause Parkmobile’s processing fees to rise.
However what Parkmobile originally said was “increased costs triggered by recent federal legislative reform enacted by the Dodd-Frank Wall Street Reform and Consumer Protection Act’s Durbin Amendment.” That triggered by is so ambiguous as to be unassailable, though it’s similarly meaningless when it comes to assigning real blame.
For example: “Dennis the Menace’s mid-grocery meltdown, including wailing and juice-box-throwing, was triggered by his mother demanding that he stop urinating in the cereal aisle.” I don’t think it’s the trigger to blame there; Senator Durbin certainly doesn’t feel his amendment is to blame either.
As I pointed out yesterday, the management staff of Fontinalis probably feels differently about regulation. Founders have worked at Goldman Sachs, UBS, Highbridge Capital, Booth American, and other equity firms. On a whole these are people who aren’t going to be be regulatory fans, and where Durbin points the finger at processing firms for making up lost revenue by jacking up other charges the Fontinalis folks just see the person who originally pushed down on the lump in the waterbed.
Durbin’s letter below the jump.
Dear Mr. Bogaard:
On October 25, a Parkmobile marketing and sales support manager sent a grossly misleading email to Parkmobile customers in the District of Columbia. The email claims that “Beginning October 29th, transaction fees in DC will increase from $0.32 to $0.45 due to increased costs triggered by recent federal legislative reform enacted by the Dodd-Frank Wall Street Reform and Consumer Protection Act’s Durbin Amendment.”
This email follows a press release that Parkmobile issued on October 23 (“Parkmobile USA, Inc. introduces the Parkmobile Wallet in the District of Columbia”) in which you claim that a new Parkmobile product “offer[s] a relief from the impact of recent federal legislation passed by Congress.”
Your company’s email and press release incorrectly blame the Durbin Amendment for increasing your processing fees. My amendment did not raise these fees, it put a ceiling on them. Visa and MasterCard raised your fees, and as a merchant you were helpless to stop them short of the ceiling the new law created. Instead of honestly telling this story, you decided to side with the credit card giants and refuse to tell your customers what really happened. So, I ask that you retract these misleading communications and provide your customers with a clarification that sets the record straight.
The decision whether or not to increase transaction “swipe” fees rests with Visa and MasterCard alone. The Durbin Amendment was crafted to put a limit on exactly the type of unreasonable swipe fee increases that you lament. Blaming the Durbin Amendment for Visa’s and MasterCard’s decision to raise your fees is like blaming a traffic cop for a driver’s decision to speed and drive recklessly.
Additionally, your company has shown a fundamental lack of understanding about what the Durbin Amendment actually does. Your press release quotes a local official who endorses Parkmobile’s new product because “changes outside our control have caused credit card fees to rise.” The Durbin Amendment did not regulate credit card fees; it only regulated debit card fees on certain transactions.
Visa, MasterCard and their big bank allies have made tens of billions each year by charging American businesses like yours unreasonably high swipe transaction fees. The Durbin Amendment took a modest step toward reining in this unfair swipe fee system because high swipe fees harm consumers and businesses alike. The fact that Visa and MasterCard are still able to impose unreasonable swipe fee increases on some debit and all credit card transactions is not an indictment of the Durbin Amendment, but rather shows that more must be done to rein in Visa and MasterCard’s unfair swipe fee system. Instead of criticizing my efforts to stop Visa and MasterCard’s abusive fee increases, I urge you to instead join those efforts. Your business and your customers will be better served if you do.
Richard J. Durbin United States Senator