ALEXANDRIA, Va. -- NACS is calling new Electronic Payments Coalition (EPC) research claiming that retailers are not passing promised debit-card swipe-fee savings on to consumers "worthless" and is questioning its methodology.
On October 1, 2011, retailers began paying less to accept debit cards due to provisions in the Durbin amendment to the Dodd-Frank Wall Street Reform & Consumer Protection Act. This measure set the price of debit interchange--what merchants pay to accept cards--at approximately 21 cents, down from an of 44 cents.
The EPC survey claimed that at least 76% of the retailers included in the research have not passed savings on to consumers. It included four chains in the survey: Walmart, Walgreens, 7-Eleven and Home Depot; field researchers visited stores in Washington, D.C., Boston, Little Rock, Ark., Atlanta, Portland, Maine, and San Francisco.
To collect the data, EPC said researchers made 84 shopping trips at 21 stores. They purchased a consistent list of products during four separate shopping trips at each store: one in the final week of September, before the October 1 implementation deadline and three additional times following implementation.
EPC said 16 of the 21 stores either raised prices or kept them the same before and after the October 1 implementation of the Durbin amendment. And it claimed that overall, customers paid on average 1.7% more after implementation.
Of the 21 stores visited, 12 raised prices by an average of 5.1%, and four stores kept prices the same, according to EPC. Five stores lowered their prices, by an average of 5.8%, it added. In total, 76% of stores either raised prices or kept them consistent after the Fed rule was implemented; 23% of stores lowered prices after implementation.
NACS spokesperson Jeff Lenard told CSP Daily News, "No one in their right mind could possibly believe that the industry that pushed for a monthly $5 debit card fee actually cares about consumers. They don't, and have proven so time and time again. They also clearly don't care about the facts. The study itself is so poorly constructed that it's difficult to even call it research."
He added, "It doesn't show that any store's overall prices went up. They selected a handful of items at stores that carry upwards of 50,000 unique products. This isn't even close to a representative market basket, or a representative look at retail. It doesn't even look at swipe fees. There is no mention if swipe fees went up or down at any of these stores. What a surprise--the banks are hiding swipe fees again. There also is no discussion of how the banks increased their fees on small-ticket items. A swipe-fee research project without any information on swipe fees is not a swipe-fee research project. It's not any kind of research project. No other costs are examined. There is no examination of wholesale cost changes or other business costs in any of these calculations."
He concluded, "I hope they didn't pay much for this 'research' because it's worth absolutely nothing."
Dallas-based 7-Eleven did not respond by press time to a request for comment by CSP Daily News.
Click here to read the full EPC report.
And click here to read NACS' complete response.
The EPC represents credit unions, banks and payment card networks that move electronic payments worldwide. Its stated goal is "to protect the value, innovation, convenience and competition in today's growing electronic payments system."
Founded in 1961 as the National Association of Convenience Stores, NACS is the international association for convenience and fuel retailing. It has 2,100 retail and 1,600 supplier member companies that do business in nearly 50 countries.
(Click here forprevious CSP Daily News coverage of swipe fees.)
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