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NRF Seeks to Lower Debit-Card Swipe Fee
The National Retail Federation believes the fee is unnecessary for smaller bills
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.
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About the Author
Nick Powills
FollowNick Powills, CFE, founded No Limit Agency in 2008 and serves as Chief Brand Strategist for the Chicago-based firm. No Limit is a full-service communications agency that establishes and elevates brands by bridging Public Relations, Social Media, Marketing, Advertising, Digital, and a lot of creativity, to best strategize well-rounded and successful campaigns for 50+ global franchise brands. By presenting visionary ideas and building real relationships, No Limit is able to create effective media branding strategies to help companies grow. Nick currently leads a staff of writers, media strategists, designers, social media experts and digital producers in an office think-tank where brands are humanized for strong, compelling media stories. Prior to starting No Limit at the age of 27, Nick spent four years working at a franchise PR agency where he mastered the art of building rapport with media outlets and creating newsworthy pitches for earned media placements. He holds a Bachelor of Journalism from Drake University in Iowa.
