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?