NACS calls Fed’s final rule “an irresponsible abdication of its legal duty.”
The U.S. Federal Reserve’s final rules on debit card swipe fees “is an irresponsible abdication of its legal duty to implement the law as written,” said National Association of Convenience Stores (NACS) Senior Vice President of Government Relations Lyle Beckwith.
The final rules issued today set a per-transaction debit swipe fee of 21 cents, which is significantly higher than the Federal Reserve’s originally proposed rate of 7 cents or the compromise rate of 12 cents. The rules also add 0.05 percent of the transaction amount for fraud prevention.
“Final rules should look like proposed rules. This should have been a clear victory for consumers. We are left to believe that the credibility of the Federal Reserve is in question because it’s obvious that political pressure from the big banks has impacted the outcome of the final rules,” said NACS Chairman Jeff Miller, who is president of Norfolk, Virginia-based Miller Oil Co. “A cap of 21 cents per transaction is better than the current average of 44 cents per transaction, but it is more than 400 percent more than the 4 cents per transaction that the a Fed-sponsored survey of banks found to be the real cost of processing a debit transaction.”
Swipe fees are the convenience and fuel retailing industry’s top pain point and second largest expense item — behind only labor costs. Credit and debit card fees at convenience stores jumped a staggering 21.6 percent to hit a record $9.0 billion in 2010, surpassing overall convenience store industry profits for the fifth straight year. As a percentage of overall sales, credit and debit card fees increased from 1.45 percent to 1.56 percent of total industry sales dollars, factoring in all forms of payment, including cash and check. Just looking at motor fuels sales, credit and debit card fees added 4.7 cents to every gallon of gasoline sold at convenience stores in 2010.
“It is clear that we need to push for real reform to our payments system,” stressed Miller. “Ten years ago, NACS members told us that swipe fees were their top pain point. (See the video <http://www.nacsonline.com/NACS/News/Daily/Pages/ND0606111.aspx> outlining top retailer concerns in 2001.) This decade-long battle is the first break in the stranglehold that the banks have on the payments system in this country, and it will not be the last,”
The final rules issued today will begin to be implemented October 31. They were originally expected to be finalized by April 21 and implemented by July 21.