Sacramento wants to limit debit card fees

August 5, 2010

The state Assembly is expected to take up a bill this week, already passed in the Senate, that would make it illegal for merchants to charge debit card fees. [Chronicle]

The legislation, originally introduced by state Senator Jenny Oropeza (D-Long Beach), wants to eliminate all debit fees, believing them to be unfair and discriminatory.

“More and more people are turning toward debit cards – they now account for more than half of retail transactions nationwide,” said Oropeza staff consultant Brendan Hughes, who wrote the measure and argued that it will help less-affluent Californians. “If you can’t charge something on a credit card, then the purchase price of paying with a debit card is higher than credit. … This is affecting the most susceptible of Californians, and we need to protect them.”

Debit transaction fees normally range between 45 cents and $1. Credit card users are exempt from the fees because of legislation passed 25 years ago.

The measure is supported by some consumer groups and payment networks such as Visa, which controls an estimated 75 percent of the country’s debit card market. Although Visa does not allow debit fees, many merchants charge them anyway, according to business leaders.

Atlantic Richfield Co., owned by British Petroleum, and a number of business associations that represent small merchants oppose the bill, saying it will hurt consumers and merchants.

The bill passed the state Senate on a vote of 22 to 9.

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