NACS Reacts To 21 Cent Cap on Swipe Fees

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 <>  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.



  1. 21 cents – 9 for the government bailouts – 12 for the real cost.  It’s perfect math!

  2. Balagogineni says:

    WHy not just add credit card and debit card costs to the cost of the items? That is, add cash cost -x, then cost for using credit card – x+c and for using debit card – x+d.  Why should cash paying customers subsidize credit and debit card customers?

  3. CTGas Guy says:

    This is the Federal Government bought and paid for by big business.  When the Fed survey shows real cost of $.04 cents per transaction and you make the fee $.21 that allows for a profit margin of 425% over and above the actual cost.  So with that said where is the incentive for Banks to really prevent fraud abuse.  They can just write it off as a tax deduction/expense against their business and NOT pay tax’s on the profits. You go government at a time when they need the money – great business savy! No wonder the government is broke!  No common sense!

  4. American Citizen says:

    The First Question Everyone Should Be Asking Is This:
    1. WHY ARE WE ALLOWING AN ILLEGAL AND UNETHICAL ORGANIZATION CALLED THE “FEDERAL RESERVE” (which has nothing to do with our LEGAL government and the name is a con) TO BE EVEN LISTENED TO WHEN IT COMES TO MATTERS OF IMPORTANCE IN AMERICA? They have conned all of us since it’s inception in 1913 when it was passed by a few people in Congress when everyone else was home for the holiday vacation! They make money out of “thin air” and then “lend it” to the US Government (us the citizens) and then charge an interest on it!!HOW BIG OF A CON AND SCAM IS THAT? IT MAKES BERNIE MADOFF’S RIP-OFF LOOK LIKE POCKET CHANGE! 

    Why do you think the Fed wants the credit limit to be enlarged? 

    They are doing the same thing now as what they did in 1913….scare the American Citizens into believing we have no choices but to let them increase the credit limits!! LOOK AT WHAT THEY’VE DONE TO OUR COUNTRY SINCE 1913 EVERYONE…..LOOK UP THE FACTS…DON’T TRUST ME, GET THE FACTS FROM EXPERTS….IT’S ALL IN “BLACK AND WHITE” FOR US TO SEE!!





  5. EthicalAndMoralStandards says:



    I respectfully ask that you contact me via e-mail so we can brainstorm a solution to this major problem. 

    Everything will be confidential and we’ll come up with strategies that are good for us and good for Americans…a.k.a. our Customers! 

    Are you up for the challenge?

    Lets combine our ideas, concepts, and strategies to make this a win-win for everyone.

    Lets talk!

  6. Anonymous says:

    The new debit limit benefits exclusively retailers, although their CEOs and lobbyists are telling us that consumers will be the ones who will reap the biggest advantage from the cap on debit fees.  Any revenues lost by card issuers will translate directly into a positive revenue flow of an equal aggregate amount for retailers.

    It is very unlikely that any of the windfall will be passed on to consumers. Anyway, even if that did somehow happen, consumers would still be net losers, due to the fact that banks will inevitably make up for their interchange-related losses by generating higher revenues elsewhere.  Actually, they are already doing it.

    • Browniesmm says:

      Not so my friend. As the owner of 2 C-stores, if the fees had been capped at 12 cents, it was my intention to offer a 7 to 10 cent reduction per gal. for anyone that used their debit card versus a credit card. True, some of the savings from lower fees would end up in my pocket, however the majority WOULD be passed on to the consumer. Just good business and savy marketing. I now have to rethink that strategy. 

      • Anonymous says:

        Well, I don’t doubt that you would have done what you are saying, just as I’m sure that some other merchants would have done the same.  I think that you would have been in a distinct minority, but I can’t prove that.  Anyway, that is beside the point.  The point is that, whether or not a portion of the saved interchange would be passed on to consumers, they would be more than offset by the rise in fees elsewhere, as detailed in my post.

        • CtGas Guy says:

          Your blog appears to say “who will benefit” but the real story here is merchants being overcharged for a service and paying banking costs above and beyond the actual cost of that service which then dips into the profits of those business owners just becasue they use a credit card for the convenience of their customers.

          Your blog goes on to say the banks whould increase other fees for their customers who are using those services.  THAT is the story – shiting cost’s, increaseing profits by credit card processing companies and banks to others just becasue they use a PART of service the credit card processor provides.

          As a business owner, I have no issue paying for what I use and as a bank credit card customer consumers should pay for what they use and we all determine if the cost is worth the convenience.  I bet you DID NOT know that credit card companies prevented business owners from offering their customers a cash discount IF they took credit cards.  I know this becasue I successfully had the CT legislature pass a bill that prevented credit card companies from doing this.  Why should any business owner be prevented from offering any type of a discount when the custumers pays cash which reduces risk, bookeeping cost’s and get instant credit for use of the funds?  That is what you should be blogging about!

          • I own a gas station in Illinois and I give a discount for customers that pay with cash for cigarette cartons.  I used to charge additional charge for credit and debit card users and VISA did not like it. Even though, the result is more or less the same, when I called cash discount VISA did not have a problem.  I know a number of gas stations do this in our area.

          • Anonymous says:

            As Balagogineni points out below, merchants have always been able to give discounts to customers paying in cash, which is not against Visa and MasterCard rules.  I know for a fact that many gas stations here in Boston have been doing it for as long as I can remember.

            In any case, the point I’m making is that issuers are now charging more elsewhere to make up for future losses resulting from the debit interchange cap.  It’s already happening.  I’m not arguing whether one side is right or the other, but that the government should stay out of it.

            Still, now that the debit cap is in place, everyone who accepts debit cards should make sure that their pricing is based on the interchange-plus ( pricing model.  That is the only way you will benefit from the fee cap.

  7. Metrofuel1 says:

    I wonder how much it cost the banks to buy off the Federal Reserve.  This is a criminal act in my mind and those responsible for the fleecing of America should be arrested and brought before a court of law as they are stealing money from American business and the American public.  This is wrong and to add .05% for fraud is another slap in our faces.  I’m disgusted with this ruling and getting to the point that we start discouraging debit and credit by offering incentives on cash. 

  8. I totally agree with Lyle’s position, and Jeff’s comments completely, however if someone had asked us last year if, as an association, would we be happy if the fees were cut in half from .44 to .21, I believe we would have all said “yes, a good start”.  So let’s not be too hard on ourselves or be disappointed with the progress that has been made!  I personally feel like there are many federal bureaucracies that need to have their wings clipped as the regulatory agencies seem to ignore the “intent” of legislation that comes out of Congress and they have always ignored “we the people” and what we have pushed forward.  The Fed should wake up and look at all the signatures that this Industry collected last year as a real barometer of what the people were feeling and be able to realize that the .17 spread between actual cost of the transaction at .04 and what they have now set as the rule is outrageous!  So as an Industry, it is time once again to round up the troops, hit the emails, the letters and phone calls to the Fed and to our Congressmen and Senators and continue to make a very loud screeching sound until they get the message again.  The banks spent somewhere around 100 Million Dollars trying to reverse the Durbin Amendment, and were unsuccessful getting it overturned.  I guess we found out today where they spent all that money!  Lets see which staffers at the Fed are driving new cars, or going on expensive vacations, cause it sure does looks and feels like somebody got bought!!!!
    Larry Miller – Miller Management & Consulting Services, Inc.

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