Spare small businesses and lower debit-card fees

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Banks are in the midst of a misbegotten, last-ditch effort to protect the billions of dollars they make each year from debit-card “interchange fees,” the charges they hit businesses with each time a consumer swipes their card.

The financial-overhaul bill approved by the U.S. Senate last month includes an amendment that would limit just how much banks can charge merchants for debit-card transactions. It also would allow merchants to set minimum purchases for credit cards and permit them to accept some types of cards over others.

A House version of the bill doesn’t address those issues, and neither version addresses fees that merchants pay on credit-card transactions.

Lawmakers will meet in the next few days to begin negotiating House and Senate versions of the bill with the goal of sending a final version to President Obama by July 4.

We think it’s time put these fees to rest and give the nation’s businesses — especially its small businesses — a much-needed reprieve from bank fees of one sort and another.

Banks typically charge businesses between 0.75 percent and 1.25 percent for each debit-card transaction, although those rates can vary based on the type of purchase and the retailer.

Those expenses are no doubt passed along to consumers.

Merchants have tried for years to persuade legislators to reduce interchange fees, saying that banks are charging too much for the transactions that are essentially no different than cash or checks.

Not so, banks counter, saying that the billions in revenue they generate are needed to cover costs associated with maintaining the debit-card business and paying for fraud prevention and technology expenses.

What the bill would essentially do is allow federal review of interchange rates — which are set by Visa and MasterCard — to determine whether they are “reasonable and proportional.”

That seems fair, doesn’t it?

But with time running short, the nation’s largest banks have unleashed an assault on the legislation, pleading their cases in press conferences and urging high-ranking employees to pressure local representatives.

It’s not only the big banks that oppose the legislation. Small banks and credit unions with assets of less than $10 million that wouldn’t even be regulated under the bill oppose it too.

They argue that any measure to reduce big-banks’ fees would force them to lower fees, too, because they have to compete with big banks.

Gee, imagine that, competitive forces actually helping the small guy or gal.

Much of the nation is still reeling from recession, and now would be a good time to unshackle our business community from unjust banking fees.

Doing so will help businesses, their customers and, in turn, strengthen the economy as a whole.