July 16, 2024

Bucks: Debit Card Fees to Fall, but Will Consumers Benefit?

After weeks of back-and-forth debate and heavy lobbying by banks and retailers, the Senate voted Wednesday against delaying a cap on the swipe fees that stores must pay for the processing of debit card purchases.

The vote means that the Federal Reserve Board will move ahead to complete the cap on the charges, formally known as “interchange” fees, by July 21. The board has proposed rules that would limit the fees charged by banks to 12 cents per transaction, down from the current average of 44 cents per transaction.

What remains to be seen, however, is whether the savings will be passed on to shoppers.

The country’s biggest banks, which earn billions in revenue from the fees, fought hard for a delay or an outright repeal of the cap, which is part of the Dodd-Frank financial regulation law. They’ve warned that they will have to curtail rewards programs and other customer perks, and perhaps generate fees elsewhere, to make up for the lost interchange revenue.

Retailers fought hard to lower the fees.

Consumers, at any rate, have low expectations of receiving any benefits from the change, said Paul Bragan, director of quantitative research at Wakefield Research, which has tracked public opinion on the interchange debate since 2008.

Wakefield’s latest findings show that consumers and voters are much smarter about how debit cards work, and that they’re skeptical that merchants will pass along the savings they get from the new law. “They don’t believe that they’re going to see a benefit when they go to the store,” Mr. Bragan said. In fact, nearly three-quarters of those polled agreed that the prices they pay would not be reduced by merchants and retailers.

What do you think? Is it unreasonable to expect that merchants pass along at least some of the savings to customers, in the form of lower prices at check out?

Article source: http://feeds.nytimes.com/click.phdo?i=613b54e0dd35a0c5c1fc71f4fedf3a8d

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