You may have noticed that retailers could be shifting their gears to bring you better prices. This isn’t just for the holidays. On October 1, the new Federal Reserve regulations cut debit card swipe fees roughly in half. “Retailers across the nation are developing a wide range of innovative ways to pass these savings along to their customers with lower prices and better value,” NRF senior vice president and general counsel Mallory Duncan said. “Change won’t come overnight, but consumers will definitely benefit.”
Members of the highly competitive retail industry have considered a wide range of ways to use the savings to increase value for their customers, such as overall lower prices, specific discounts for using debit cards, free or lower-cost delivery on appliances, free alterations on clothing or hiring additional staff to improve customer service.
Sounds like all good news right? Well, don’t think it’s all sunshine and rainbows because the banks might be trying to put a dark cloud over your parade. While the cap will produce considerable savings for retailers and their customers on most purchases, some merchants are upset that fees could actually go up on smaller-ticket purchases. The cap amounts to 27 cents on a $100 transaction, or about one-sixth the $1.50 collected under the current fee schedule. The regulations would allow banks to charge less than the cap for small purchases, but recent news reports indicate that Visa and MasterCard banks plan to instead charge the maximum allowed. “Even as these regulations are about to go into effect, banks are trying to turn what is supposed to be a ceiling on these fees into the floor for small transactions even though those fees were already grossly out of proportion to the amount of the purchase,” Duncan said.
“Swipe-fee reform is about bringing competition to a fixed marketplace. Retail is a price-competitive industry, and many consumers will see savings as a result of the reforms,” Merchants Payments Coalition (MPC) spokesperson Rachel Wolf said. ” The big banks who try to levy unfair fees will soon learn the lessons of competition as consumers choose banks and credit unions, larger and small, that treat them fairly. The mega-banks can scapegoat and scam all they want, but they are likely to drop the fees when they lose customers to competitors.”
Banks have not implemented any new regulations yet but expect to see some by the Christmas holiday. Few retailers have been able to announce specific programs to pass the value onto consumers, however, because banks have only belatedly begun to communicate details of their new pricing structure to retailers. Even though the regulations set caps, precise fee schedules will still be up to the card companies and processors.
– Taneisha Jordan