Independent retailers aren’t alone in constructing the front lines of the lobby war surrounding the issue of debit card swipe fees, as Congress also works to keep these brick and mortar retailers standing and their front line strong.
Independent Retailers’ First Sign of Concern
As USA Today columnist, Fredereka Schouten, points out, the battle that launched the war “centers on a provision championed by Illinois Sen. Richard Durbin, the No. 2 Democrat in the Senate, that requires the Federal Reserve Bank to issue rules that place ‘reasonable’ limits on the fee.” In retaliation to the limits scheduled to go into effect in July, banking communities began to dismantle the Federal Reserve’s plans and rebut the proposed reductions in debit card swipe fees from taking effect.
Decrying the draft Federal Reserve rules as price-fixing by Congress, slashing more than $12 billion in bank revenue annually by capping the fee at 12 cents per transaction, the banking community has threatened to make up the difference via other operational changes.
Independent Retailers May Suffer No Matter the Outcome
If independent retailers get their wish, then banking customers may experience increased ATM fees or eliminated free checking, as the $12 billion needs to be made up somewhere. This appears to be a clear message from the banking community that not everyone can be happy, and while independent retailers march along the front steps of 1600 Pennsylvania Avenue, consumers may adversely feel the effects with increased banking fees and less money to spend on independent retail product and merchandise.
Independent Retailers Keep Their Ground
The threat of the possible alternative actions from the banking community doesn’t appear to diminish the determination of independent retailers in finding a result to meet their demands. In fact, some appear to have a plan that could help those consumers affected by possible bank fee increases. Although profit is the goal of retail, and some would benefit in retail growth with low swipe fees, other independent retailers aren’t looking to pull one over on the banking community for profit opportunities.
For instance, A.J. Jaber, independent retailer and owner of two Marathon gas stations in Detroit, relays to the Detroit Free Press that he would be able to lower prices if he paid less in swipe fees. Like many gasoline retailers, he offers a cash-only price that’s slightly below what customers pay if they use credit or debit cards. If the banking community gets its way, debit and credit cards will put a pain in Jaber’s side, as well as his profitability and sustainability.
To read more on this head to head debate between independent retailers and the banking community check out this USA Today article and Detroit Free Press column.