WASHINGTON -- The Philadelphia Federal Reserve has just released a report that debit-card reform has helped small banks, said the Merchants Payments Coalition (MPC).
The report analyzed debit-card interchange or swipe fees since the Federal Reserve’s debit-reform regulations took effect in Oct. 2011.
Philadelphia Fed researchers concluded that large banks’ swipe fees declined after reform but small banks’ fees actually had risen.
“After the ceiling was imposed, the volume of transactions conducted with cards issued by exempt banks grew faster than it did for large banks,” they said.
Banks with less than $10 billion in assets were exempted from debit reforms.
“Banks have been throwing out this smoke screen for years, pretending small institutions would get hurt despite the fact that only about 100 huge banks are subject to the law,” said Mallory Duncan, senior vice president and general counsel of the National Retail Federation (NRF) and chairman of the MPC, which fights for fair fees.
“Now we have proof from the Fed that small banks have actually been helped by debit reform,” Duncan said.
Every time a consumer swipes a debit card to pay for gas or groceries, the bank that issued the card takes a cut of the transaction as a swipe fee; therefore, convenience-store retailers have supported lowering swipe fees.
The Dodd-Frank financial reform bill ordered the Federal Reserve to write rules limiting the price-fixing of these debit swipe fees for banks with more than $10 billion in assets.
Some banks with less than $10 billion in assets (exempt banks) had expressed concerns that they would be negatively impacted by these changes.
The Philadelphia Fed report demonstrates that exempt banks’ concerns are unfounded, MPC said. The report concluded that “the evidence does not support the claim that competitive forces have effectively imposed the interchange fee ceiling on small banks.”
The Merchants Payments Coalition is a group of restaurants, retailers, supermarkets, drug stores, convenience stores, gas stations, online merchants and other businesses fighting unfair credit-card fees and advocating 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.
Click on the link below to view the report.
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