BofA's Swipe Gripe
Merchants Payments Coalition questions bank's reform-related loss claim
WASHINGTON -- Bank of America has attributed a third-quarter net loss of $7.3 billion to credit-card and debit-card interchange or "swipe" fee reform. In response to that claim, the Merchants Payments Coalition, representing 2.7 million U.S. businesses with 50 million employees, said the financial institution is off base."The charge results from the limits to be placed on debit interchange fees under the financial reform legislation enacted in July 2010, which will reduce future revenues in the Global Card Services business," Bank of Americ said in its third-quarter financial report ([image-nocss] click here to view the full report)."With a Federal Reserve decision on debit interchange rates not expected until mid-2011, [the] claims by Bank of America dramatically overstate reality and represent a feeble attempt to divert attention from its mortgage foreclosure problems," Doug Kantor, counsel to the Merchants Payments Coalition, said in a statement.
In July, Bank of America said its annual debit revenue was $2.9 billion and that it could fall by $1.8 to $2.3 billion per year starting in the third quarter of 2011. Yesterday's earnings report condenses more than four years' worth of the possible losses into a single report, the coalition said.
"For small merchants across America, the losses they face at the hands of Bank of America and the credit-card industry are real and not estimated. The size of the hidden swipe fees that Bank of America and others charge is truly staggering. The Durbin amendment, passed by Congress earlier this year to fix the broken debit payments market, is the first step towards small business owners and consumers getting relief from these hidden fees. Everyone should welcome the time next year when small businesses and their customers will begin to save on the billions of dollars in fees that the nation's largest banks have swiped from their pockets for more than a decade," added Kantor.
(Click here for previous CSP Daily News coverage of interchange fees.)
The Merchants Payments Coalition is a group of retailers, supermarkets, drug stores, convenience stores, fuel stations, online merchants and other businesses that are fighting against unfair credit-card fees and fighting for a more competitive and transparent card system that works better for consumers and merchants alike. The coalition's member associations collectively represent about 2.7 million stores with approximately 50 million employees.