Retail Swipe Fees Remain High
Retail trade groups expressed heavy disappointment over the Federal Reserve’s final rules on debit-card interchange fees, or the bank fees charged a retailer every time a consumer uses a debit card to purchase a product.
The rate reduction, which was approved on June 29, is not as low as the interchange fees first recommended in December.
“The announcement today from the Federal Reserve is a disappointment to merchants and consumers who face unfair and excessive fees imposed by big banks and credit-card companies,” said Sandy Kennedy, president of the Retail Industry Leaders Association.
“American consumers suffered a major loss today,” said Matthew Shay, National Retail Federation president and chief executive. “We are extremely disappointed that the Federal Reserve chose to be influenced by special interests and ignored the will of Congress and American consumers. While the rate will provide modest relief, it does not go far enough.”
The Fed approved new fees of 21 cents per transaction or five basis points multiplied by the value of the transaction. The new rule takes effect on Oct. 1. The Fed originally recommended fees of up to 12 cents per transaction, which would have taken effect on July 21. Previously, banks could charge up to 44 cents per transaction. Debit-card reform was demanded by the Durbin Amendment, technically known as Regulation II (Debit Card Interchange Fees and Routing) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was passed in 2010.
The final rules did not please some bankers either. In a statement posted on the website of Arlington, Va.–based Consumer Bankers Association, Richard Hunt, the trade group’s president, called the reform “price fixing.” “[It] doesn’t even allow the industry to recover their costs of providing this valuable service to retailers and consumers,” Hunt wrote.
According to the NRF, debit- and credit-card swipe fees together add up to $50 billion a year. The trade group said it fears the fees will be passed on to the consumer.
Federal Reserve Chairman Ben S. Bernanke said the Fed board would continue to monitor the impact of swipe-fee reform to judge whether the final swipe-fee rules are accomplishing their intended goals and that “monitoring will include collecting and publishing data related to debit-card costs and interchange fees.”
