WASHINGTON ? According to recent news reports, Visa and MasterCard will treat the swipe fee cap set earlier this year by the Federal Reserve as a minimum as well, costing retailers more on small transactions. The intent of the bipartisan law passed by Congress in 2010 was to fix the broken debit market, rein in out of control swipe fees and save small businesses money. ??
?This move by Visa and MasterCard clearly hurts businesses and consumers by undermining Congress? intent that swipe fees be reasonable and proportional,? said Mallory Duncan, chairman of the Merchants Payments Coalition.�?Attempting to charge the public the maximum ceiling amount, no matter how small the transaction is, unfortunately is all too typical of what we?ve come to expect from the card companies and their banks.???
Data released by the Federal Reserve in December showed that, although merchants paid on average 44 cents on every debit transaction, the transaction cost just 4 cents to process.�By comparison, paper checks have been processed without any interchange fee for nearly a century.�In December, the Federal Reserve proposed a cap between 7 and 12 cents for banks with $10 billion in assets, ensuring 200 percent profit for the issuing banks.�In July the Federal Reserve released a dramatically different final rule that raised that cap to 21 cents, guaranteeing an astounding 525 percent profit on every transaction.
Bank costs have been low enough to carry these small transactions at a significantly lower swipe fee rate for years.�According to analysts, the swipe fee hike may increase swipe fees on a $2 purchase from 8 cents to 23 cents.?
?The Federal Reserve is complicit in the fleecing of America?s retailers, small and large, and consumers.�Today?s news is proof-positive that the Federal Reserve?s decision to kowtow to the big banks and credit card networks and abandon the facts that supported its earlier proposal have given license to Visa and MasterCard swipe more from small merchants struggling to survive,? said Katherine Lugar, executive vice president for public affairs at the Retail Industry Leaders Association (RILA).
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