Durbin: Let’s Nationalize Card Processing Under the "FRAC" Act

Durbin: Let’s Nationalize Card Processing Under the "FRAC" Act

Senator Dick Durbin is at the forefront of the crackdown on the outrageous credit card processing rates.  He is proposing new legislation to curb the rising cost of credit card processing.  Durbin’s chief of staff said, “Everyday our office gets countless complaints from small merchants about their high rates.  They demand something be done.  Durbin apparently has solution.   We’ll just nationalize card processing under the FRAC Act.” 

Apparently,  the Durbin Amendment was not enough.    What would a full scale nationalization of the credit card processing industry look like?   “We’re looking at a 1% fee to cover the cost of the transaction and a government residual of a quarter of a percent.”  Durbin’s aide said.  

Senator Durbin’s nationalization is getting some support from other Democrats.   Senator Warren’s office is looking into the new legislation.  A spokesperson for Senator Warren said, “There is nobody in this country, who got rich on his own.   If you built a bank or an ISO, good for you.    But the banks use the money printed by the federal government.   The banks borrow the money from the Federal Reserve near 1%.  The banks use the The banks hire workers the rest of us paid to educate.  The bankers are safe in their banks because of our police forces the rest of us paid for.   It’s time for them to pay some of that back.  The transaction fees that these banks charge the merchants are outrageous.  The merchants built the businesses and they are the ones making the sales.  The banks are sometimes taking the biggest cut.   Leaving security and fraud aside, does it really cost 3%, sometimes more than 5% to process a credit card?   We all use the same internet and it doesn’t cost  3% to send an email or a tweet.  In light of Durbin’s call for nationalization, the senator is in favor of a full investigation into these unfair banking practices.” 

What would a nationalization of the credit card processing industry entail?  There are several proposals on the table.   One thing is for certain, there would be an across the board rate reduction, which small businesses favor.  Here is a list of ideas being put forward by the Democrat Senators under the “Fair Rate Adjustment Card Act or “Frac”

Rolling Visa/Mastercard/American Express/Discover into a government agency run by the Treasury. 

Setting a 1% Treasury interchange rate (TIR).

Setting a 0.25% government residual to help pay down the national debt. 

Tying your government credit card to your social security number. 

Elimination of the small business transaction expense/subsidy.  

Regressive Reward Points Schedule to help poor and middle class families earn double or triple points on card purchases.   

The unionization of ISO agents under the AFL-CIO. 

There are some impediments for “Frac” to be passed into law.   As expected,  the Republicans are preparing to put up a fight.  There are some Republicans that are being persuaded that FRAC makes sense.  Some Republicans are repeating complaints from companies like Walmart, Apple and even Google that the credit card industry is really a bank monopoly and needs more government regulation.    A spokesperson for Senator Mitchell’s office said, “If the government’s residual is tied to a balance budget Amendment or the reduction of spending, then there is a real possibility that the Republicans in Congress could get behind FRAC.”  

That remains to be seen.  There is still an uphill battle.  But as an aide to Representative Congresswoman Debbie Wasserman Schultz said recently, “Remember, it was only a few years ago that people said that Universal healthcare could not be done in this country.  We now have the Affordable Care Act.   What’s wrong with a universal credit card processing rate, where the government and ultimately the tax payer benefits?  If we can get the president behind FRAC, I’m sure we can get this done too.”

We will have to wait and see if President Obama will get behind the legislation.   All indications appear that he will.   He’s given too many gifts to Wall Street and FRAC would be a generous gift to Main Street.

Blindbid advises all ISO’s to write to their senators to stop the "Frac"ing from going forward.  In the meantime, purchase our high quality leads. 

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