Swipe Fee Changes To Save Consumers Money

Washington, DC, Oct. 4, 2011 -- Merchants and their customers will save billions of dollars with new Federal Reserve regulations cutting debit card swipe fees roughly in half that took effect last weekend, the National Retail Federation said.

“Retailers across the nation are developing a wide range of innovative ways to pass these savings along to their customers with lower prices and better value,” NRF Senior Vice President and General Counsel Mallory Duncan said.

“Change won’t come overnight, but consumers will definitely benefit. Reducing these fees will put billions of dollars back into the Main Street economy, helping American families stretch their paychecks and ultimately preserving and creating local jobs to keep America on the road to recovery.”

Under Fed regulations made final this summer, the “swipe” fees the nation’s largest banks charge merchants to process debit card purchases are capped at no more than 21 cents per transaction – plus 0.05 percent of the purchase price and, in most cases, an additional 1 cent for fraud prevention – beginning on Saturday.

That compares with 1-2 percent of the transaction – about 44 cents on the average retail purchase but several dollars on bigger-ticket items – under current fees.

Debit card swipe fees currently total about $20 billion annually, and analysts have estimated the cap will save merchants and their customers about $7 billion. Small and mid-size financial institutions with less than $10 billion in assets are exempt.