Exorbitant Bank Fees for Online Transactions Coming to End

Today the Federal Reserve released a federal notice affirming the Fed’s position that card networks should enable dual routing for card not present transactions. The notice issued today starts a 60-day comment period. The Retail Industry Leaders Association (RILA) has been a vocal advocate to the Federal Reserve to ensure a merchant’s right to route is ensured through all payment channels.

“E-commerce has grown exponentially over the past decade and even more during COVID, and big banks and the dominant card networks are not following the letter of the law by preventing a merchant’s right to route debit transactions,”  said Austen Jensen, Senior Vice President, Government Affairs at the Retail Industry Leaders Association (RILA). “The Fed’s notice acknowledges that banks and dominant card networks treatment of e-commerce transactions are in clear violation of the law. Retailers have been saying this for years. There is no valid reason for retailers to be hit with higher fees when a purchase is made online instead of in a brick-and-mortar store.”

The Durbin Amendment to the Electronic Funds Transaction Act and its implementing regulations made it illegal for banks to choose to limit routing of transactions to a single dominant network, yet this is what has been happening for online purchases.

“Refusal to accept e-commerce transactions routed over the nondominant networks violates the Electronic Funds Transfer Act. The banks and dominant card networks are abusing the payment system at the expense of merchants. It is high time this ends. RILA is encouraged by the Fed’s rulemaking announced today and looks forward to working with the Fed to see a final rule enacted,” said Jensen.

Today, The Fed also released its biannual report on issuer costs.

“The biannual report released today by the Federal Reserve, shows the cost for the largest Wall Street banks is only a few cents to handle debit transaction, but they are still allowed to charge main street retailers over 700% in swipe fees,” Jensen said. “This is the sixth consecutive report from the Federal Reserve, where the data has shown the costs for the largest banks to handle debit transactions has declined. It is long past time for the Fed to follow congressional intent and set a reasonable and proportional rate to reflect the actual costs for Wall Street banks. Retailers look forward to working with the Fed to make this happen.”


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 elevate a dynamic industry by transforming the environment in which retailers operate.

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.

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