It has been five years since the Federal Reserve lowered the cap on the debit card swipe fees that merchants have to pay to card issuers. Now, the National Retail Federation is requesting another drop to help merchants save even more money.
Prior to the new regulations, merchants were spending an average of 45 cents per transaction for debit card interchange fees. That figure has been reduced to 24 cents.
Mallory Duncan, senior vice president for the NRF, issued a letter to the Federal Reserve stating that, “In most cases, 24 cents per transaction represents a significant savings over the prior non-competitive pricing. However, it is still substantially higher than issuers’ incremental costs.”
In other words, the lower fee has saved merchants money – just not enough of it.
This theory mostly applies to merchants that process a large volume of small transactions, like coffee shops and convenience stores. Those small transaction fees can quickly add up when they represent a hefty percentage of the overall bill.
In August of last year, the Federal Reserve Bank of Richmond released a study indicating merchants still hadn’t seen much savings after the Durbin Amendment to the Dodd-Frank Act. At that time, 67% of merchants reported no changes to their debit card fees, and 23% reported a price increase after the amendment. The NRF’s findings indicate that merchants are, in fact, saving money, but the Federation feels the amount they are saving still needs adjusting.