Last Thursday the U.S. Senate approved a controversial amendment to a financial reform bill making its way through Congress, with a 64-33 vote to limit the amounts banks can charge retail merchants for debit card transactions. In addition, the amendment would give retailers the freedom to give discounts to consumers that use cash or who use types of cards that the retailer prefers, as well as allowing retailers to refuse to accept cards for smaller purchases. Currently retailers must abide by credit card company policies that forbid them from charging credit card customers more than cash customers or from setting thresholds on card purchase amounts.

Thursday’s vote is not the final word on the matter, however. The Senate bill will have to be reconciled with a similar financial reform bill moving through the House of Representatives before the bill goes to President Obama for a final signature. The House bill does not currently have any language related to limiting card fees for merchants, so the amendment still may not survive the bill’s final writing.

The fight over fees that retailers pay on debit card and credit card transactions has been raging for a number of years, with merchants arguing that the card companies and issuing banks are raising fees without any discernible difference in the service being provided, while the card industry argues that merchants want it both ways, getting a valuable service without paying the costs necessary to keep the system operating smoothly. While merchants are pleased with the Senate amendment’s passage, neither side scores a complete win, as the amendment calls for the Federal Reserve to mandate debit card fees that are “reasonable and proportional” to the costs the card networks incur, but it does not limit fees on credit card purchases.

It will likely be months before the final bill makes it to President Obama. The card fee amendment is just one small part of a far-ranging financial overhaul bill that will affect a variety of industries, and the fight to insert and delete certain regulations will be fierce.

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