Today marks the first anniversary of the implementation of the Federal Reserve rules issued under the Durbin Amendment, which reduced debit card swipe fees. The National Grocers Association (NGA) applauds the reforms as a good first step in providing consumers and merchants’ relief from excessive swipe fees.
“NGA members fought hard for the debit swipe fee reforms and believe it sets the stage for similar reforms to credit card swipe fees, which are eight times higher in the United States than in Europe and other developed countries,” said NGA President and CEO Peter J. Larkin. “To ensure the marketplace works like it should, we need transparency and competition brought to credit card swipe fees.”
A report by Moody’s Investors Services recently concluded that retailers and other merchants operate in highly competitive markets, like the grocery industry, and as a result, retailers must keep prices as low as possible to stay in business. The savings from debit reform has offset escalating costs of things like gas and food commodities. While Moody’s conservatively projected that debit savings could counterbalance a normal rise in consumers prices, in fact, debit swipe reforms has enhanced emphasis on the ability to provide discounts and other benefits for cash and has resulted in lower prices and savings for consumers in a number of circumstances.
While NGA maintains that the Federal Reserve’s debit swipe fee rules were not perfect and did not go as far as they should have under the law, the reforms nevertheless are an important first step by providing consumers and some merchants with relief and protection from excessive and hidden fees. Merchants, especially in rural areas, may not have received as much relief since they are served by smaller banks that were exempted. In fact, according to a recent Government Accounting Office report, the estimated 14,300 small banks, credit unions, and savings and loans banks nationwide exempted from the Durbin Amendment have seen their debit swipe fee revenue go up.