NRF: Fed Debit Interchange Proposal Doesn’t Go Far Enough

Feb. 25, 2011

While opposition to the Federal Reserve’s plan to limit debit card swipe fees at 12 cents per transaction has come under increasing fire lately, a national retailer trade group told the Fed this week that the proposal does not go far enough. “History has shown that by adopting at-par presentment for checks, Congress and the Board got it right,” the National Retail Federation (NRF) said in comments filed with the Federal Reserve Board of Governors on Tuesday. “A century later, Congress has provided the Board with the opportunity to get it right again by renewing the principles embedded in the Board’s at-par checking rules. When every party bears its own costs, the free market will force all parties to strive to minimize their costs and every party will have the potential to win.” The Fed is currently reviewing comments on the proposed rules, with an April deadline to approve a final version so the reforms can take effect in July. The NRF noted that banks, in their own filings with the Fed, have claimed only 4 cents as their cost of processing a debit transaction, and that a study by financial research firm First Annapolis Consulting estimated the cost at .33 cents for PIN debit and 1.36 cents for signature transactions. The NRF said it “strongly urges” the Fed to further reduce the cap “toward a level that more accurately reflects the actual costs.”