Fed mulls lower store fees on debit purchases
The Federal Reserve proposed on Thursday lowering the fees that merchants must pay when shoppers use debit cards, a move that could reduce retail prices but result in higher banking fees for consumers.</br></br>Under the recommended new rules, the interchange fee, or "swipe fee," on debit cards would be capped at 12 cents - about 70 percent lower than the average fee of 44 cents per transaction last year, according to the Fed. The total amount banks received from debit card interchange fees was $16.2 billion.</br></br>The move was applauded by retail industry groups and small businesses, which have long said the fees are excessive and they have little power to negotiate them down. Retailers have also said the cost of the fees is second only to labor and is growing faster than health-care expenses. On Thursday, they said the new rules would allow them to deliver significant savings to shoppers.</br></br>"This is not only good for businesses, but most importantly it's good for consumers," said Hank Armour, chief executive of National Association of Convenience Stores. "There is an abundant amount of evidence cost savings will be passed through."</br></br>Interchange rates are set by card processors such as Visa and MasterCard and paid to banks as an incentive to use their networks. In a statement, the American Bankers Association, a trade group, said the proposal would have a "dramatic impact" on the industry at a time when bank revenue has also been curtailed by strict new regulations on credit card interest rates and overdraft fees. The swipe fee ruling would reduce banks' ability to offer basic low-cost services, make loans and fight fraud, he said.