Wednesday, October 19, 2011
Swipe fee regulations took place October 1, 2011
As reported in our July 13th Retail Advocate, the Feds delayed until October 1st the enactment of regulations to cap debit card transactions fees.
What does this mean to RMA retail members?
When a consumer makes a purchase using a debit card issued by a “large bank” over $10 billion in assets, the debit card transaction fee will be capped at no more than 21 cents per transaction, plus 0.05 percent of the purchase price and in some cases an additional 1 cent for fraud prevention.
Small and mid-sized financial institutions with less than $10 billion in assets are exempt from the new regulations.
Some merchants are upset that the fees on small-ticket purchases could increase. The new regulations would allow “large banks” to charge less than the cap for small purchases, but some reports indicate that Visa and MasterCard banks plan to charge the maximum allowed.
Duncan Mallory, VP National Retail Federation said, “Even as these regulations are about to go into effect, banks are trying to turn what is supposed to be a ceiling on these fees into the floor for small transactions even though those fees were already grossly out of proportion to the amount of the purchase, unfortunately, this is all too typical of what we’ve come to expect from the card companies and their banks.”
How will this affect the Consumer?
In September, Bank of America announced it will become the first major bank to charge customers across the country a monthly fee to shop with their debit cards.
The $5 fee will debut next year for the bank’s basic checking accounts. It will apply only to debit card purchases and not to ATM withdrawals, online bill pay or mobile phone transfers.
The move by Bank of America, the nation’s second-largest bank by number of locations, could clear the way for other banks to institute similar charges.
Consumers have a choice, they may pay by a credit card that doesn’t have an annual fee, switch to a non-profit credit union, pay by check or cash.
Retailers have choices also. According to the Bureau of Consumer Protection Business Center, retailers have options; such as discounts to customers or another incentive for using a certain method of payment, minimum dollar amount for credit card purchases and network availability and routing for debit card transactions.
||For more information, please click on this PDF to read the FTC’s New Rules on Electronic Payments, Lower Costs for Retailer.
The Virginia Retail Federation, your retail advocacy partner here in the Commonwealth of Virginia, is here for you to help you better understand these regulatory issues. If you have further questions or comments, call me—George Peyton—today at 804.662.5505 or email me directly at firstname.lastname@example.org.