No matter where you stand in the debate surrounding debit interchange fee caps, it’s important to understand just how these federal rules could affect you if enacted. The Electronic Payments Coalition—composed of hundreds of banks, consumer advocacy groups and credit unions across the country—is now working to inform consumers about the risks of government-imposed interchange fees.
The EPC’s message is simple: If the federal government enacts rules capping interchange, or swipe, fees, then it will consumers that ultimately foot the bill. Consumers that don’t carry cash will be forced to buy more than they want in order to complete transactions, debit rewards programs will disappear and fees will increase, and retailers could discriminate against customers not carrying their preferred card if choice. In effect, interchange fee caps do the opposite of what the Dodd-Frank bill intended: to protect the interests of consumers. To date, the organization has sixty four members that include Bank of America, JPMorgan, Visa, MasterCard and the American Bankers Association, and have published various studies, reports and analyses over the past two years to protect the interchange industry.
The EPC Takes a Stand Against Fee Caps
The EPC has been around since at least 2006, according to its spokeswoman Trish Wexler, who referred to her organization as the preeminent umbrella coalition for the interchange industry. The derailing of interchange fee cap rules passed within the Dodd-Frank bill is currently the number one issue on the organization’s agenda.
“Many legislators didn’t realize the implications of the bill,” Wexler told MyBankTracker.com, who referred to Senator Richard J. Durbin’s amendment a legislative trick that wasn’t sufficiently researched by its creator before being attached to the Dodd-Frank Act. As a result, the EPC has been at the forefront of a campaign to eliminate Durbin’s interchange fee rules and is working to inform consumers about the harm of interchange fee caps. Here’s a video featuring Wexler that premiered this past June:
You can check out a slew of letters members of the coalition have written to Congress in opposition to interchange fee caps on the EPC website.
Interchange: How Does It Work?
Interchange is a cost the merchants pay every time they accept debit and credit cards, and average at about 1.4% per transaction. The revenues collected by banks and credit unions for interchange allow them to cover costs associated with services that include customer data protection, card production costs, debit rewards programs and customer service. If enacted this July, interchange fee caps would limit the amount of interchange fees banks with assets of more than $10 billion could charge to between 7 cents and 12 cents per transaction.
For those of you still confused about exactly how the interchange industry operates, the EPC created a great visual flow chart, which you can view below:
Do you want to let the Federal Reserve know your feelings about interchange fee cap rules? Leave a comment with the Federal Reserve before the end of the public comment period on Feb. 22.