Click hereto view the full text of NACS's letter.
The Federal Reserve requested comment on two alternative interchange fee standards that would apply to all covered issuers: one based on each issuer's costs, with a safe harbor (initially set at 7 cents per transaction) and a cap (initially set at 12 cents per transaction); and the other a standalone cap (initially set at 12 cents per transaction). Under both alternatives, circumvention or evasion of the interchange-fee limitations would be prohibited.
In the letter, the association detailed what will impact the convenience and fuels industry the most. "With respect to debit interchange transaction fees, NACS unreservedly believes Alternative 1 to be the best combination of reduced regulatory burden, clarity and increased efficiency. While NACS believes the proposed safe harbor is overly generous given the Federal Reserve's own data and other countries' debit systems (many of which operate without interchange), this option represents real progress toward an improved system. The safe harbor and cap should apply to every transaction. For example, no issuer should be able to exceed the cap on any transaction even if the issuer keeps average fees below the cap.
"With respect to fraud and fraud mitigation costs, NACS supports comments submitted by the Merchants Payments Coalition advocating for a performance standard for determining qualified fraud prevention expenses. The baseline for such a standard should be the fraud levels experienced on PIN debit transactions, which are far lower than those for signature debit.
"With respect to debit card restrictions, NACS unreservedly recommends the adoption of Alternative B by the Board as the only suitable solution to establishing competition between card networks on every transaction. Alternative A would have limited effect; it would not create competition for the majority of transactions and it would not satisfy the language or intent of the Durbin Amendment. Further, the minimal cost and technical requirements of implementing Alternative B should be recognized and an accelerated implementation deadline should be adopted."
Founded in 1961 as the National Association of Convenience Stores, Alexandria, Va.-based NACS represents 2,100 retail and 1,600 supplier member companies.
NACS also supports the letter sent yesterday by the Merchants Payments Coalition. The coalition is a group of convenience stores, retailers and small-business owners whose member associations collectively represent approximately 2.7 million stores with 50 million employees.
Meanwhile, a coalition of U.S. banks and credit unions yesterday urged the Federal Reserve to fundamentally revise its proposed rule on debit-card interchange fees. They submit a comment letter detailing what they called "serious flaws" in the proposed rule, which is designed to implement the Interchange Amendment to the Dodd-Frank financial regulatory reform legislation.
If adopted, they claimed, the rule would impose government price controls on fees. The infrastructure for debit cards, which has been developed at a great cost by banks and credit unions, functions effectively and efficiently, all supported by interchange fees, they said. According to the letter, the proposed rule would force banks and credit unions to take a loss on each and every debit-card transaction.
Click hereto view the full text of the bank and credit union letter.
(Click here for previous CSP Daily News coverage of swipe-fee reform.)
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