Banks Pushing to Increase Debit Card Swipe Fees

Banks are pushing to change a cap on debit card swipe fees that the Federal Reserve implemented in 2011.

However, 89 percent of consumers believe the “swipe fee limits should not be undone,” according to a survey by the National Retail Federation. Additionally, 84 percent of consumers say swipe fees should be set on a competitive basis rather than determined, and increased regularly, by banks, the National Retail Federation survey shows.

Swipe fees make up a portion of the purchase price that banks charge retailers to process a credit or debit card transaction—a fee passed on to consumers in retail pricing, according to the National Retail Federation.

Before the cap on debit and credit card fees, fees amounted “to $48 billion a year, with $17 billion coming from debit cards,” U.S. News & World reports. This increased retail prices and led Congress to authorize the Federal Reserve to place a limit on debit swipe fees, according to the National Retail Federation.

Since 2011, swipe fees for debit card “charges would be capped at 21 cents per swipe, plus 0.05 percent of the transaction, with the possibility of an additional cent if banks comply with fraud prevent procedures,” according to U.S. News & World Report. 

In a 2013 study conducted by Robert Shapiro, former senior advisor to President Bill Clinton, a majority of the savings accrued from debit card swipe fee reform was passed along to retailers’ customers. In addition, the study found that the cap led to “the boost in economic activity, [which] supported the creation of 37,500 new jobs in both retail and other industries.”