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The fees grocers pay to banks for consumers to make debit card purchases may be coming down, according to the Wall Street Journal.
The Federal Reserve is set to hold a meeting next week to discuss a proposal that would change the cost structure. Currently retailers pay large card issuers 21 cents plus .05% of the purchase amount. The cost was set by the Federal Reserve back in 2011.
The cap can be lowered if the Fed Reserve feels shoppers are purchasing less with debit cards, but otherwise, it has not been touched in 13 years.
The Wall Street Journal reports that a vote will be taken during the meeting to lower the cap, but specifics of the proposal are not known.
If the proposal passes there would be a time for public comment, and it would then have to be approved by the central bank’s governors before being implemented.
FMI—The Food Industry Association says it is all for the lowering of debit card fees, which would help grocers.
“We have long advocated for the Federal Reserve to reduce the regulated rate to reflect the significantly reduced cost of processing these transactions as was required by the Dodd-Frank Wall Street Reform and Consumer Protection Act,” FMI President and CEO Leslie Sarasin said. “We are very pleased that the Board is heeding grocery retailers’ call for reform.”
FMI and the National Association of Convenience Stores jointly petitioned the Federal Reserve Board to lower the transaction cost in 2022. Last month, the Supreme Court agreed to hear a case that would force the Board to reduce the fee.
Banks make a bundle off of it. Citing trade publication Nilson Report, the Wall Street Journal said the cap generated $16.6 billion 2022. Banks claim the money generated helps protect from fraud.
Small banks and other card issuers do not have to abide by the cap and instead use debit-interchange fees that could charge more than 1.5% of the purchase amount.
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The feds are calling a meeting to reportedly propose reducing debit-card transaction fees that grocers have to pay for each transaction. How much are those fees currently affecting your bottom line?
Let us know in the comments below or email your thoughts to the SN staff at [email protected]. Be sure to include your full name and work title.
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