November 9, 2011
Wal-Mart Stores Inc and McDonald’s Corp executives believe the new debit card transaction rules now appear to be less effective than initially anticipated at reducing their expenses and may even increase costs, according to the Chicago Tribune.
"Treasurers from the world’s largest retailer and biggest restaurant chain said at a financial industry conference last week that debit card processing costs, or interchange fees, were not low enough despite the new limits to have a real impact on retailers,” continued the newspaper.
The new rules could raise expenses for McDonald’s and other U.S. merchants who process a large number of small-dollar transactions, said Robert Donovan, U.S. assistant treasurer for McDonald’s, at the ATM, Debit and Prepaid Forum.
“I don’t think we gained anything from Durbin,” said Donovan.
Richard Peck, 7-Eleven’s senior director for corporate finance, predicts that while the chain’s processing expenses for gas will decrease, processing costs for in-store transactions will likely rise.
Donovan pointed to privately held DVD company Redbox, which raised rental rates at its movie kiosks to $1.20 from $1 as a result of the new debit rules.
Peck added that any savings on 7-Eleven gas-related debit card costs would be “rapidly passed through” to consumers.
Michael Cook, treasurer for Wal-Mart, called debit reform “a good first start” Yet the store views pursuing credit card swipe fee reform as the ideal next step. Click here to read the full article.