The Retail Industry Leaders Association (RILA) criticized a final rule released today by the Federal Reserve as failing to honor the intent of the bipartisan reforms passed by Congress. The rule, which guides implementation of the debit swipe fee reforms, is a startling departure from rules that the Federal Reserve proposed in December and will ultimately prevent the intended relief from reaching merchants and consumers.
“The announcement today from the Federal Reserve is a disappointment to merchants and consumers who face unfair and excessive fees imposed by big banks and credit card companies,” said RILA President Sandy Kennedy. “The Federal Reserve’s about-face suggests it abandoned the facts that the Board embraced in the December proposed rules, instead ceding to the wishes of the big banks and credit card companies.”
Data released by the Federal Reserve in December showed that, although merchants paid on average 44 cents on every debit transaction, the transaction cost just 4 cents to process. By comparison, paper checks have been processed without any interchange fee for nearly a century. In December, the Federal Reserve proposed a cap between 7 and 12 cents for banks with $10 billion in assets, ensuring 200 percent profit for the issuing banks. Today’s final rule dramatically raises that cap to 21 cents, guaranteeing an astounding 525 percent profit on every transaction.
“The Federal Reserve today has badly damaged its credibility. The merchant community will explore its options to implement the debit interchange relief that Congress intended,” concluded Kennedy.
RILA is the trade association of the world's largest and most innovative retail companies. RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs and more than 100,000 stores, manufacturing facilities and distribution centers domestically and abroad.