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Debit card swipe fee reforms have put $5.8 billion in consumers' hands through lower prices, according to a study by economist Robert Shaprio of Sonecon LLC. The debit fee reform also saved merchants $2.6 billion in 2012.
The study was cited yesterday by the Merchants Payments Coalition, an Arlington, Va.-based group made up of retailers, supermarkets, drug stores, convenience stores, fuel stations, online merchants and other businesses that are fighting against unfair credit card fees and for a more competitive and transparent card system.
Ultimately, the lower prices to consumers have led to increased spending, which in turn can be linked to helping create 37,501 new jobs, the study suggested.
These savings and job gains could have been "substantially larger," according to the Merchants Payment Coalition, had the fees been cut to 12 cents as originally recommended by the Federal Reserve. If that cut had been implemented, an additional $2.79 billion would have been generated in consumer savings, along with $1.2 billion in merchant savings.
Meanwhile, if swipe fees for all credit card transactions had been held to the same level as debit fees in 2012, consumers would have saved an additional $15.4 billion, and merchants would have saved another $6.9 billion. With both debit and credit reform in place, consumers and merchants would have realized total annual savings of $34.9 billion, conceivably creating a total of 153,976 jobs every year.
Upon release of the study, National Grocers Association president and CEO Peter Larkin said, "While the Federal Reserve Board's rule incorrectly allowed debit swipe fees to be raised on small purchases and could have produced even more benefits for consumers and merchants by lowering fees to the more reasonable and proportional levels originally proposed, this study clearly illustrates consumers and the economy benefitted from the passage of the Durbin Amendment. The study also reinforces that more needs to be done to correct the mistakes of the Federal Reserve on debit fees and to curtail the excessive credit card fees that burden America's consumers and merchants. It is truly unfair that American swipe fees are the highest in the industrialized world and eight times higher than in Europe."