Last week, the Federal Reserve released its biennial report on fees charged or received by debit card issuers and payment card networks. The report revealed that while merchants' costs have remained fixed at the 21 cents plus five basis points cap set by the Federal Reserve in 2011, banks' cost has dropped by more than half, to just 3.6 cents. Retailers have argued since 2011 that the Federal Reserve's cap was inconsistent with the underlying law's requirement that merchant fees be "reasonable and proportionate" to the cost of the processing the transaction. Further, the report finds that banks collected more than $20 billion in debit swipe fees last year alone.
"The Federal Reserve's data confirms that it is long past time for the Federal Reserve to lower the base interchange rate of 21 cents to reflect the current reality in today's payment ecosystem," said Austen Jensen, Senior Vice President of Government Affairs. "The 580 percent markup that Wells Fargo and other Wall Street banks charge merchants is neither 'reasonable' nor 'proportionate' to the cost of the transaction. The problems with the implementation of the reforms are made worse by the fact that large banks have refused to enable routing competition for ecommerce transactions, a requirement under the law. It is time for the Federal Reserve to abide by Congressional intent and update their policies surrounding these pro-competitive reforms to reflect the market in 2019."
RILA is the US trade association for leading retailers. We convene decision-makers, advocate for the industry, and promote operational excellence and innovation. Our aim is to reimagine and transform the retail ecosystem - and equip leading retailers to succeed in it.
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.