Merchants Payments Coalition: Federal Reserve Bends to Bank Pressure

Source:www.unfaircreditcardfees.com

Washington, DC – Merchants and consumers reacted with serious concern and anger to the Federal Reserve’s final swipe fee rule, which made significant concessions to the country’s biggest banks and deviated from the proposed rule and the intent of the law.

The Merchants Payments Coalition is exploring all available legal options to address the irresponsible mistakes made in writing this rule.

“The Fed’s rule is an irresponsible abdication of its legal duty to implement the law as written in favor of doing the bidding of the nation’s largest banks,” said Lyle Beckwith, Senior Vice President of Government Relations at the National Association of Convenience Stores.

“The Federal Reserve very clearly did not follow through on the intent of the law,” said Mallory Duncan, Chairman of the Merchants Payments Coalition. “This rule is unacceptable to Main street merchants and consumers, who were counting on the Fed to issue a fair rule that followed Congress’ law. Unfortunately, this rule does not meet those qualifications.”

In its proposed rule issued last December, the Federal Reserve found that the average PIN debit swipe fee cost 23 cents per transaction—and that the average cost for a bank to process a transaction was 4 cents. Under the final rule, Americans still pay the highest debit swipe fees in the world-while many other industrialized countries such as Canada don’t permit debit swipe fees at all, and still maintain robust banking industries.

The final rule sets the debit swipe fee cap at 21 cents plus 0.05% of the transaction amount.

“Today’s action actually increases costs on the most secure PIN debit transactions and is irresponsible and certainly not reasonable,” said Jennifer Hatcher, Senior Vice President of Government and Public Affairs at the Food Marketing Institute.

For almost 100 years, paper checks have cleared at par without swipe fees. Merchants and consumers will continue their struggle towards transparency and fairness in the debit card market in the hope that someday there will be parity between paper checks and electronic checks.