Russell Simmons won a battle on Capital Hill after the Hip-Hop impresario took on supporters of the financial reform bill’s regulation of debit card fees.
The mogul who owns UniRush, the distributor of his “Rush Card” debit cards, appeared in D.C. earlier this month to lobby for “interchange fees”, fees that he believes if taken away will hurt low-income people who are often purchasers of his Rush Card.
According to Simmons the cut on interchange fees would force him to charge his customers more and ultimately profit big name companies like Walmart and Best Buy.
Interchange fees which occur between banks and retailers have long been thought to be more beneficial to retailers than to big banks.
When a consumer uses their debit card at a retailer, the retailer’s bank pays a 1 percent to 2 percent fee to the consumer’s bank.
Retailers pay an estimated $20 billion a year in interchange fees to banks such as Citi Group and Bank Of America.
Senator package Durbin of Illnois was aiming to make an amendment to the financial reform bill that would cap interchange fees, ultimately benefiting retailers and hurting issuers of debit cards like Simmons’ UniRush.
After meeting with the Hip-Hop head, lawmakers apparently saw eye to eye with Simmons and on June 21 Senator Durbin announced that he would exempt pre-funded debit products, including the RushCard, from the fee limits.
Simmons’ Rush Card is described as a “better alternative to banks” and has an estimated 2.5 million customers.