WASHINGTON — The National Retail Federation last week responded to the Federal Reserve's proposal to cap debit card swipe fees at 12 cents per transaction.
The retail trade association said that banks should honor debit transactions at or close to face value, similarly to the way checks are handled. Debit swipe fees are currently 1% to 2% of each transaction, NRF said, totaling about $20 billion a year — card company practices compel merchants to pass these fees along to customers through higher prices. The Federal Reserve estimates that its proposed cap would save merchants and their customers about 70%, or about $1.2 billion a month.
NRF said the proposal’s “only shortcoming is its failure to carry the principles through to the extent necessary to achieve true market correction in a realm long lacking transparency and competition.”
“History has shown that by adopting at-par presentment for checks, Congress and the board got it right,” 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 Federal Reserve currently is reviewing comments on the proposed rules, with an April deadline to approve a final version, so the reforms can take effect in July.