NRF Seeks to Lower Debit-Card Swipe Fee

The National Retail Federation believes the fee is unnecessary for smaller bills

SPONSOREDUpdated 2:14PM • 03/25/16

The National Retail Federation (NRF) recently requested the Federal Reserve lower the five-year-old cap for debit-card swipe fees. Mallory Duncan, senior vice president and general counsel for the NRF, said the swipe fees are unnecessary for small-ticket bills, like the ones at restaurants and the fee is a bit higher than what was originally intended.

“In most cases, 24 cents per transaction represents a significant savings over the prior non-competitive pricing,” Duncan said in a statement. “However, it is still substantially higher than issuers’ incremental costs.”

Duncan said that the swipe fee works well in most situations, but it is unnecessary for small bills. A study conducted by credit card processor TSYS found that 25 percent of consumers used a debit card at coffee shops and 32 percent used them at quick service restaurants. Duncan went on to say the Federal Reserved originally agreed on a lower fee. Under the 2010 Dodd-Frank Consumer Protection and Wall Street Reform Act, the Federal Reserve was required to put regulations in place that would make debit swipe fees that were reasonable.

“Federal Reserve staff calculated the average cost at 4 cents per transaction and proposed a cap no higher than 12 cents,” read in a release by the NRF. “Nonetheless, after heavy lobbying from banks the Federal Reserve board of governors eventually settled on 21 cents plus 0.05 percent of the transaction for fraud recovery and allowed another 1 cent for fraud prevention in most cases.”

The NRF has the support from other groups, such as the Food Marketing Institute, the National Association of Convenience Stores and the National Restaurant Association.

Click here to read the original article.