Merchants Criticize Federal Reserve Decision to Maintain Interchange Fee Standards


In issuing its bi-annual report on swipe fees as required by law, the Federal Reserve last week said it would keep the existing interchange fee standards and fraud prevention adjustments the same. The per-transaction cap remains at 21 cents and also allows for an additional charge of 0.01 cent to cover fraud as well as .05 percent of the sales amount.

The Merchants Payments Coalition (MPC), of which NATSO is a member and which represents more than 50 retail groups, quickly 
criticized the Federal Reserve for refusing to protect consumers and merchants from a 500 percent mark-up levied by banks and credit card companies every time someone swipes a debit card. The group said banks and credit card companies have stacked the decks against merchants and consumers.

MPC said the report found that the fees paid to large banks by merchants and their customers are five times the actual cost the banks incur to swipe the card. The average cost to process a debit transaction is 5 cents, the report found, yet the average actual fee collected on such transactions is 24 cents.
“This report shows that the Fed made a mistake in implementing an effective law. Consumers and merchants should be benefiting more from the reforms," said Jennifer Hatcher, Senior Vice President, Government and Public Affairs, Food Marketing Institute, and a member of the MPC. "No merchants in a competitive marketplace mark up their products and services by 500 percent. They would be put out of business. It should be the same for banks and credit card companies."

Debit swipe fee reform, passed by Congress in 2010, required the Federal Reserve to ensure that the fees charged to merchants that accept debit cards, be “reasonable and proportionate” to the cost of the transaction. The law exempted 99 percent of all banks and applied only to those banks with more than $10 billion in assets. In 2011, the Federal Reserve imposed rules that capped debit swipe fees for non-exempt institutions at roughly 24 cents.

Photo Credit: mcfields/


This article originally ran in NATSO News Weekly (NNW), NATSO's member only weekly electronic newsletter. NNW is packed with the latest updates on government and business issues affecting the truckstop and travel plaza industry.

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