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8 June  2011


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Swipe Fees Going Down for Retailers


The Wall Street Reform law signed by the President in 2010 gave the Federal Reserve the authority to lower the “swipe fees or interchange fees” banks charge retailers every time a consumer use a debit card to make purchases.  The current Federal Reserve plan will exempt banks with less than $10 billion in assets from implementing the lower fee. The Federal Reserve will make a final determination on what the fee will be by 21 July 2011. 

Swipe fees provide the banking industry with over $16 billion in revenues according to 2009 data from the Federal Reserve.  Debit cards account for 35% of non-cash payments and are used more than checks.

The swipe fee is usually 1-2% of the total charge a consumer makes with their debit card.  This averages about 44-cents per transaction.  The Federal Reserve plan will call for a 12-cent cap. 

If you are a retailer this is a great victory.  This would significantly reduce the amount of money you have to hand over to banks who issue those debit cards and you to hold on to more money.  The draw back is that banks (that issue those cards) may limit how much a customer can charge per transaction to $50 or $100.  In order to make up for the lost revenues banks may also charge fees for other services such as checking accounts, ATM fees, or other services.  By exempting smaller banks from charging lower fees, retailers may reject purchases made by their debit card Holders in order to avoid having to pay the higher swipe fee.

See follow on story 1 July 2011

By Owen Daniels










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