Pet Product News Editorial Blog:
Monday, June 21, 2010
Take a Swipe at Debit Card Fees
By Sherri Collins
Editor, Pet Product News International
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How do you pay when shopping? Cash? Check? Credit card? More importantly, how do your customers typically pay for their purchases? If they’re like me, the answer is none of the above. 
I use my bank debit card because it’s the same as cash or checks, but much faster. Right? Wrong, as anyone who runs a retail outlet knows—debit cards have significant swipe fees, just as credit cards do. The fees are felt directly by retailers and indirectly by consumers in the form of higher prices.
That may change, however, if the just-launched radio campaign by the National Retail Federation (NRF) has its intended effect. The campaign urges the U.S. House and Senate to keep an amendment seeking reasonable swipe fees for debit card transactions in financial services reform legislation that is nearing finalization this week.
“With big banks and the credit card industry pushing hard to strip this important consumer protection out of the financial services reform bill, we want to make sure that members of Congress realize how angry small businesses and their customers are about these fees,” said Steve Pfister, NRF senior vice president for government relations.
The 60-second ad points out that using a debit card costs 43 times more than using a check and urges listeners to contact their congressional representatives and demand that the amendment remain in the bill. The radio spots are targeting the constituents of members of the House Senate conference committee, which is in negotiations on the final version of the Restoring American Financial Stability Act.
House and Senate final votes are expected the following week, with the bill landing on President Obama’s desk by July 4.
How much are card companies gaining and consumers and retailers losing on swipe fees? According to the NRF, the fees average between 1 and 2 percent for debit cards and 2 percent or more for credit cards. Overall swipe fees charged to retailers and other business by Visa and MasterCard banks totaled $48 billion in 2008 and resulted in higher prices estimated at $427 for the average household. Debit swipe fees alone amount to about $20 billion of the annual total.
$427? That’s a lot of cat food in my or anyone’s checkbook.
The amendment in question, sponsored by Majority Whip Richard Durbin, D-Ill., would require the Federal Reserve to set regulations for “reasonable and proportional” swipe fees for debit cards, taking into account banks’ actual costs for processing the transactions. The NRF also reported that the amendment would also make it easier for merchants to offer discounts or other benefits for customers who don’t use credit cards, and to set minimum purchase amounts for credit cards.
That seems more than fair to me.
Click here to listen to a sample radio ad.
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