Supreme Court Denies Retailers’ Request for Lower Debit Card Fees
Last week, after a three-year court battle over debit card processing fees, the Supreme Court finally ruled in favor of the banks to keep the existing fees. The Federal Reserve already set a cap on interchange fees after the 2010 Dodd-Frank financial law, but retailers were attempting to further decrease these swipe fees.
The initial goal for the interchange fee cap was to save the merchants money so they could ultimately charge less for their products and services. According to Hunt, that savings has never made its way down to consumers.
Still, retailers are looking to reduce their costs through whatever means necessary. Mallory Duncan, general counsel of the National Retail Federation, responded to the decision, saying in a statement, “retailers will keep paying billions of dollars more than they should, and that fee-hungry banks will continue to rake in unearned profits that ultimately come out of consumers’ pockets. We will continue to press the issue.”
The current cap on debit card fees is set for 21 cents, though it was originally negotiated at 12 cents per transaction. In 2013, debit card issuers earned a total of $16.33 billion in interchange fees, according to the Federal Reserve.
Before the rule in 2010, banks charged an average of 44 cents per transaction, which makes the 21 cent cap a dramatic decline from the standard a few years ago. Nevertheless, merchants will continue their fight to lower debit card fees in order to minimize their overhead and maximize their profit margins.