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How do consumers feel about payment card acceptance costs, often referred to as “swipe fees”? According to a recent National Retail Federation survey, consumers want the existing debit card interchange price cap to continue, and they want credit card pricing to benefit them and merchants as opposed to “credit card companies.”
The NRF’s findings come at a time when the fight over merchants’ payment card acceptance costs is raging again, with Wal-Mart Stores Inc., The Home Depot Inc. and The Kroger Co. suing the card networks over debit card transaction routing and a federal appellate court throwing out a years-in-the-making settlement over credit card interchange and Visa Inc. and MasterCard Inc. card-acceptance rules. In addition, the chairman and a member of the U.S. House of Representatives’ Financial Services Committee have introduced measures that would repeal the debit card price caps in 2010’s Dodd-Frank Act.
The Washington, D.C.-based NRF’s survey is based on answers from 1,013 respondents that the trade group’s research firm, ORC International, polled last month and says is a representative sample of U.S. consumers.
On the topic of debit card price controls, 89% of respondents checked “I think that bank ‘swipe fees’ should remain capped to limit fees to merchants.” Eleven percent agreed with the statement, “I think the cap should be removed and banks should be able to raise their fees.”
Those statements were a reference to Dodd-Frank’s Durbin Amendment, which capped the interchange revenue of card issuers with more than $10 billion in assets to about 24 cents per transaction, approximately half the level they received before the cap took effect in late 2011. “The cap is still far higher than the average 4 cents the [Federal Reserve] estimates it costs banks to process a debit transaction,” the NRF said in a commentary with the survey results.
On the topic of credit card pricing, 84% agreed that “credit card companies should set competitive prices and processes that most benefit consumers and merchants.” Sixteen percent agreed that “credit card companies should set prices and processes that most benefit credit card companies.”
Payments consultant Eric Grover, principal of Minden, Nev.-based Intrepid Ventures, said the wording of the survey’s questions seems likely to have generated pro-merchant answers. “If you went into the Visa lunch room, you’d probably get the same thing,” he says.
Consumers might have different answers if they were asked to consider related issues such as annual fees and the level of rewards on their credit cards, according to Grover. But he adds that the NRF has “been more effective in making their case” about card-pricing issues than the card networks and banks, which generally oppose Dodd-Frank and staunchly defend existing merchant-pricing practices and rules.
One thing that is clear, however, is that the fight over merchant pricing will take years to settle, if ever, according to Grover. “This stuff is going to continue,” he says.
