Just as debit card swipe fee reform takes its toll on consumers, lobbyists have their crosshairs aimed at credit card swipe fees.

The new debit card swipe fee rules went into effect on October 1 and there are already murmurs of a repeat debacle with credit cards.

The National Retail Federation recently launched a 12-month campaign called “Retail Means Jobs”, based on the premise that success of the retail industry means jobs creation. The ailing American economy continues to be stifled by abysmal employment numbers, on which President Barack Obama continues to place focus.

Part of the agenda entails a call for lawmakers to address credit card swipe fees.

“Swipe-fee reform is a two-part job, and we are only halfway done,” said David French, senior vice president of government relations at NRF, in an NRF blog post outlining the campaign.

The NRF estimates that banks and card processors collect roughly $30 billion per year from credit card interchange fees, which are paid by merchants. Like the reduction of debit card swipe fees, lower credit card swipe fees mean retailers will be saving money on lower costs to accept card payments.

Lobbyists believe that helping retailers cut costs would lead to slashed consumer prices and increased hiring in the retailer industry.

Lessons From the Past

If recent history is any indication of what is coming in the future, consumers may not be too happy to hear of chatter of credit card swipe fee reform.

Soon after the Federal Reserved proposed lower debit interchange fee caps under the Durbin Amendment in December 2010, the financial industry altered their products to reflect the impact of these rules. These changes directly impacted millions of consumers.

Bank customers saw their free checking accounts disappear, had to pay higher monthly service fees or maintain higher account balances, and lost their debit card rewards programs. And, in recent months, debit card usage fees began hitting consumers’ accounts.

Should the NRF’s campaign brew another war between the government and the financial industry, it may not bode well for credit cardholders.

Banks have responded to reduced revenue by eliminating services and hiking fees.

There are many credit cards that don’t come with annual fees but they can start showing up – as they did on free checking accounts. Interest rates for prospective card applicants can rise. Fees could be increased on balance transfers or cash advances. Introductory offers and teaser rates may become scarce.

Meanwhile, it is too early to tell whether retailers are the key to economic stability. Time will tell whether reform in the retail sector will eventually benefit consumers through lower prices and more jobs opportunities.

Would you support the NRF in their campaign to cap credit card swipe fees?

Did you enjoy this article? Yes No
Oops! What was wrong? Please let us know.

Ask a Question

  • > and lost their debit card rewards programs

    There are banks like PerkStreet that still provide 1% cash back on signature purchases, or 2% cash back if you maintain $5k in checking. The Durbin amendment only affected big banks that had $10+ billion in assets. Banks like PerkStreet are well under 2 billion so they are not affected. I think the law is great because it takes money and power away from big banks that have grown unchecked and have been irresponsible with their finances (TARP anyone?). 

    > There are many credit cards that don’t come with annual fees but they can start showing up

    Admittedly, there is more risk to credit cards because it is actually a loan from the bank that could be defaulted on vs a debit card purchase. It will be interesting how this plays out as consumers have choice. Big banks could charge more fees, but customers could just as well walk away and work with smaller organizations. Or maybe consumers will forego credit altogether and pay with cash/debit. That will be the dismantling of the banking industry as they figure how to actually work for their money instead of living off the backs of debtors.