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Retailers Respond to Debit Issuer Discrimination Fears

By Mercator Advisory Group
May 4, 2011
in Analysts Coverage
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Peer-to-peer And Lending Text On Piece Of Paper Salient Among Other Related Keywords

The Merchant Payments Coalition (MPC) is attempting to break through the debit interchange reform chatter and set the record straight on their ability to discriminate between small and large debit issuers. Small issuers have voiced great concern over the ability of merchants, especially very large merchants, to cherry pick debit issuer transactions that offer the lowest interchange fee schedule.

“They pointed to an existing rule that imposes a $5,000 per day fine for violating the ban and noted that merchants can’t always differentiate between big-bank and small-bank cards, since customers often swipe the debit card themselves.

The coalition sent the letter to Rep. Shelley Moore Capito (R-W.Va.), with copies to every other member of Congress. She is sponsoring legislation that would delay the implementation of the Federal Reserve’s interchange rule by one year. A companion bill in the Senate would delay implementation by two years.”

While the MPC is correct from a legislative viewpoint, the more likely scenario is that the large issuers and large merchants will come together to offer attractive discounts to cardholders. If this practice takes hold, the effect will be the same – small-issuer cardholders will be disadvantaged.

Click here to read the story.

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