What is in this article?:
- Battle brews over debit card swipe fees
- Independent retailers hit hard by fees
Grocers battle the financial industry over new rules limiting the fees banks can charge to process debit card transactions.
The battle over new rules limiting the fees banks can charge to process debit card transactions is heating up as grocery store owners continue to push for a July 21 date for the rules to take effect while opponents try to block the measure.
More than 200 grocers met in Washington, D.C., last week to urge lawmakers to implement the rules included in the Dodd-Frank Wall Street Reform and Consumer Protection Act passed by Congress last year. The law requires the Fed to adopt rules to limit “swipe fees” merchants pay to banks in exchange for accepting debit cards. The Fed proposed capping the fees, known as interchange fees, to 12 cents per transaction. The current fee averages about 44 cents per transaction.
The Federal Reserve said it would miss the April 21 deadline to complete the rules because it had been swamped by more than 11,000 comments. The Fed emphasized, however, that it would be able to finish its work before the new rules take effect July 21.
In response to the Fed’s statement, bill co-author Rep. Barney Frank, D-Mass., announced last week he would support delaying the rules. “The Federal’s Reserve’s announcement that they cannot meet the deadline on interchange fees confirms my view that this is the only part of the financial reform bill that needs to be amended,” Frank said in a statement. “For this reason, I support legislative action to postpone the deadline so we can revisit it.”
U.S. debit card transactions have climbed from $8 billion in 2000 to $38 billion in 2009, and the cards have surpassed checks and credit cards as the most frequently used noncash means of payment, according to the Fed. Debit card fees exceeded $16 billion in 2009.
The financial industry calls the swipe-fee provision government price-fixing.
But supporters of the new rules say debit card fees are unpredictable and have continued to increase and that the cost of accepting debit cards is among the fastest-growing expenses for small businesses.
“Grocery stores make an average profit of less than 2 cents on the dollar,” said Leslie G. Sarasin, president and CEO of the Food Marketing Institute. “The banks make more money per transaction from swipe fees than what the store will make in profit.”