Swipe Fees South Of The Border

The US Supreme Court has decided to not review debit card swipe fee rules leaving in place a Federal Reserve determination that 21 cents per transaction is appropriate.  Earlier, an Appeals court already confirmed the Fed’s position, but that decision was appealed by a coalition of retailers, grocers and restaurateurs.

This dispute south of the border is between big banks and retail merchants and deals with swipe, or interchange fees that are determined by Visa, MasterCard and other card networks. Before government intervened, retailers paid as much as 44 cents per transaction which made it very difficult and costly to accept debit cards as a form of payment.

In 2010, lawmakers ordered the Fed to cap the fees in a bid to reduce prices for consumers. Banks responded indicating lower fees might not cover all of the costs in providing cards and related services including monitoring for fraudulent purchases. But the Fed did not go as low as retailers hoped and as low as they believed the spirit of the legislation required.

For retailers and consumers, the Supreme Court decision fails to recognize the impact of $0.21 per transaction has on small businesses that operate on razor thin margins (such as convenience stores).  Leaving it up to big banks to arbitrarily set transaction fees is not want anyone wants (other than banks).  Retailers are now seeking government for clearer language on the statute and to make sure the intent of Congress is delivered.