The feud between retailers, global networks and banks regarding interchange fees rages on. The Hill highlighted two initiatives that are in process that has resurfaced the controversy. One initiative is a data collection effort by the Fed:
The Fed is now collecting data on the debit fees. Depending on what that review finds, it could decide to adjust the fee standard, though it is not required to do so.
“We do surveys of issuer costs,” a representative for the Federal Reserve told The Hill. “We’re in the process of collecting data for 2015 and putting a report together that we expect to release later this year.
With merchants becoming more adept at routing transactions to optimize their costs and the largest merchants negotiating very favorable rates, it will be interesting when this data is published to see if actual rates paid by merchants in total turn out to be less than the fee caps established by the Durbin amendment.
Of course, many retailers feel that interchange or “swipe” fees are still too high and represent a disproportionate percentage of their operating expenses. Retailers are very interested in the outcome of the second initiative which is a scheduled review of regulations to determine the level of burden they create in the marketplace. The Hill reported:
Separately, the Fed is undergoing a once-per-decade regulatory review aimed at identifying outdated or unnecessary regulatory requirements. As part of that review, industry groups are being asked to comment on which regulations are most burdensome — with swipe fees one of the biggest targets.
“Staff is reviewing comments to determine next steps,” the Federal Reserve said.
The National Retail Federation (NRF) sent a letter to the Fed as part of this review last month, claiming debit card fees are “still substantially higher than issuers’ incremental costs.”
Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group
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