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Numbers released by the Federal Reserve show that while debit card swipe fees collected by the nation’s largest banks have fallen considerably since reform regulations went into effect last fall, they haven’t fallen far enough, according to the National Retail Federation (NRF).
“We believe the numbers for the big banks are too high, and had the Fed followed the law, there would be significantly greater savings for merchants and their customers,” noted Mallory Duncan, SVP and general counsel at the Washington, D.C.-based NRF. “This is working the way the Fed set it up to work, but the Fed didn’t fully comply with what Congress required. This is better than paying the full monopoly prices we paid before, but they are still partial monopoly prices.”
According to a report from the Fed, the average debit card swipe fee charged by large banks covered under last year’s regulations fell to an average of 24 cents in the fourth quarter of 2011, from an average 43 cents in 2009. Debit swipe fees for banks with under $10 billion in assets, which weren’t covered by the regulations, remained the same, as anticipated.
The fees are largely in accordance with the cap set under the regulations, but NRF and other merchant groups filed suit against the Fed in federal court last November contending that the agency set the cap nearly twice as high as what was allowed under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
In the opinion of the Washington-based Merchants Payment Coalition (MPC), the Fed figures illustrate that, contrary to the claims of small and medium-sized banks and credit unions that they would be harmed by the regulations, those institutions are actually thriving under swipe fee reform.
“Just as reform advocates argued and Congress intended, [the] data confirms that small institutions are unaffected by swipe fee reform,” said Douglas Kantor, counsel to the MPC, a group of retailers, supermarkets, drug stores, convenience stores, fuel stations, online merchants and other businesses. “The gloom-and-doom predictions of reform opponents have proved false.”
Americans pay the highest swipe fees in the industrialized world, the coalition noted.
Still, retailers have gained advantages from the regulations, the group observed. “While problems remain, swipe fee reform has significantly improved the debit market, resulting in countless benefits for small businesses and consumers,” added Kantor. “The intense competition that exists among merchants means consumers are winning with swipe fee savings.”