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Shoppers Unlikely To See Debit Card Discounts

Consumers will have to wait to see discounts on debit card purchases.

Retailers will reap billions of dollars in extra profits thanks to the lower transaction fees on debit cards. But don’t expect food or clothing prices to drop anytime soon.

Banks and retailers fought long and hard over debit card transaction fees. And retailers won. As of Saturday, new government regulations say stores must now pay far less to banks on debit card transactions. (Retailers must still pay higher fees on credit card transactions as they have more protections and rewards.) The ruling is a big boost for retailers and – in theory – for their customers who want to pay by debit cards.

However, The price of that 54-inch HDTV you had your eye on is unlikely to change. In fact, consumers may not see any savings at the checkout. Mallory Duncan, senior vice-president and general counsel at the National Retail Federation, says stores may offer free or lower-cost delivery on appliances, alterations on clothes or hire additional staff to improve customer service instead of price cuts. “Change won’t come overnight,” he says, “but consumers will definitely benefit.”

Others are not so sure. Those representing the financial industry say retailers have had quite enough time and suspect they will wait for the debit card fee story to blow over and quietly do nothing. Trish Wexler, a spokeswoman for the Electronic Payments Coalition, an advocacy group that represents banks and credit unions, says it’s time for big-name retailers need to roll out headline-grabbing price cuts. But, she adds, “I wouldn’t hold my breath.”

To be fair, some retailers are already offering lower prices. In 2002, the Swedish furniture giant Ikea began offering money-off coupons for customers on some purchases if they used debit cards instead of credit cards – which have a higher 2.5% swipe fee, according to, versus a cap of 21 cents per transaction on debit card purchases, plus 0.05% of the transaction. Before that, retailers were forced to pay 1%-2% of the transaction – or 44 cents on most small debit card purchases. (Mona Liss, a spokeswoman for Ikea, says it currently offers 1%-off coupons for debit card purchases.)

Duncan advises patience: “You will see a lot more three-foot signs over gas stations saying, ‘Money off for cash and debit-card purchases,’” he says.

Have you seen any debit card discounts yet?


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About Pay Dirt

  • Pay Dirt examines the millions of consumer decisions Americans make every day: What to buy, how much to pay, whether to rave or complain. Lead written by Quentin Fottrell, the blog examines these interactions, providing readers with news, insight and tips on shopping, spending, customer service, and companies that do right – and wrong – by their customers. Send items, questions and comments to or tweet @SMPayDirt.