By AnnaMaria Andriotis
- iStockphoto
In spite of vociferous lobbying from the banking industry, a Senate vote today will limit the amount of money a store must pay each time it accepts a debit card starting in July. The cap is significant: Right now, when customers use a debit card, the retailer pays 44 cents to the debit-card issuer on average; today’s 54-45 vote essentially agrees to limit that fee. Industry analysts expect it will drop to roughly 12 cents on average.
This, consumer advocates say, is good for shoppers: Whether they pay with cash or plastic, retailers offset the fees with their sticker prices. By lowering the fee, consumers should experience some savings at the register, they say. “Merchants will be forced by competition to pass their savings [from the fees] along to their customers,” says Ed Mierzwinski, consumer program director at the U.S. Public Interest Research Group. And retailers, who lobbied to limit the fees, have said they “absolutely plan to pass this savings along to their customers,” says a spokesman at the National Retail Federation.
Most retailers haven’t announced how, exactly, they plan to do this, and if customers are expecting lower prices, they could be disappointed. Currently, there are no rules or regulations about what the stores can do with the savings: Some might lower prices, says the NRF, while others might instead offer free gift wrapping, or use the savings to hire more sales people. The banking industry, which opposed the fee limits, says the saved fees could go straight to the company’s bottom line.
The vote also makes debit cards a less lucrative business for banks. For example, Chase says it will lose $1.3 billion in annual revenue as a result of the limit, a spokesman for the bank says. In anticipation, banks have been cutting back on the incentives they offer for debit card use. This year, banks including Chase, SunTrust and Wells Fargo have either cut back or ended debit-card rewards programs.
Now, some banks are considering limiting the dollar amount consumers can swipe their debit cards for. Chase says it’s considering a maximum of $50 or $100 per transaction. That’s due in part to the lower swipe revenue and the unchanged costs the bank incurs when stolen debit cards are used for purchases, says a Chase spokesman.
Retailers are bombarded with fees from every aspect in the industry. Why would a retailer pass on fees that were forced by banks which averages 8-10 cents a gallon at this time. Retailers need that profit to survive. Consumers should not have to pay the high fees either.
Dear Chase, et al: Placing a “$50 or $100 limit” per swipe on debit cards? Give me a break. Do you know the cost of groceries and gasoline today? That idea is positively silly.
So the ‘average’ transaction will cost the business 32 cents less? And they’re going to pass that on to me? Even if they did, I doubt I’d notice.
Eventually the government will require all transactions be done on debit or credit cards and the charges will apply to cash customers. Must control the populace, don’t you know.
A cashless society is the ultimate goal.
To suggest that retailers will pass the almost immaterial transaction costs to consumers is comical BUT, I’m willing to let them prove it. Let’s see in 3-6 months of retail prices have gone down as a result of the swipe fee caps, which in my mind are almost criminally stupid since consumers didn’t ask for this.
Retailers lobbying like crazy to NOT allow for a delay…they did that for us? To save us money? Really? Seriously? Whatever.
I can’t wait to hear consumers complain when the first big bank caps the amount you can “swipe” to an amount equal to that which would have lead to a 12 cent swipe fee. How’s it going to feel when you have to swipe your debit card 3 times to pay for something?