ARLINGTON, VA — Today, 300 independent supermarket companies and state trade associations sent a letter urging Members of Congress to preserve the debit card swipe fee reforms, also known as the Durbin Amendment, passed as part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. In the letter, independent grocers and state trade associations voiced concern over the negative impact that a repeal of the Durbin Amendment would have on their day-to-day operations and their company’s bottom line.
The letter was sent in anticipation of U.S. Representative Jeb Hensarling (R-TX) reintroducing the Financial CHOICE Act, which would undo the Durbin Amendment. The provision successfully reformed anti-competitive price fixing in the debit marketplace by requiring that at least two unaffiliated debit routing networks be available for all purchase made using debit cards. The provision also limited debit interchange fees to 21 cents per transaction, as well as a 0.5 percent fee on all transactions to cover fraud losses and a one cent fraud prevention fee. Consequently, today’s average debit swipe fee of 24 cents provides businesses relief from the world’s highest debit fees.
“Prior to the implementation of debit reforms, Visa and MasterCard were able to sign exclusivity agreements with banks, effectively eliminating dozens of regional debit routing networks and rapidly moving the debit routing market towards a duopoly,” the letter states. “The routing provision of the debit reforms passed in 2010 have spurred networks to compete with one another, prompting networks to innovate. Because of these reforms, debit networks have competed extensively to better secure their payments, providing significant benefits throughout the payments chain.”
In a recent study among independent supermarkets, debit cards represented the most frequently used payment method in 2015 and accounted for nearly double the number of transactions since 2000. The results also reflected that the fees placed on supermarkets were the fastest growing cost for most companies and the only expense retailers were unable to control.
“While banks and financial institutions enjoy a hefty 25 percent profit margin and earn nearly $79 billion each year in swipe fees, independent supermarkets operate on the one to two percent profit margin annually while continuing to offer the lowest possible prices in a highly competitive market,” said Greg Ferrara, senior vice president of government relations and public affairs, National Grocers Association. “Congress should be protecting Main Street grocers from the price-gouging that’s historically taken place, not enshrining it into the law.”
Retailers have saved billions since the passage of the Durbin Amendment and allowed supermarkets to maintain level prices on the goods they sell, according to economist Robert Shapiro. In fact, the Durbin Amendment has supported over 37,000 jobs over the past five years and saved consumers nearly $6 billion after the first year since implementation due to products being offered at lower prices as a result of lowered interchange fees.
The independent supermarket channel is accountable for close to 1 percent of the nation’s overall economy and is responsible for generating nearly $131 billion in sales, 944,000 jobs, $30 billion in wages, and $27 billion in taxes.
To view the full letter, click HERE.
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About NGA: The National Grocers Association (NGA) is the national trade association representing the retail and wholesale grocers that comprise the independent sector of the food distribution industry. An independent retailer is a privately owned or controlled food retail company operating a variety of formats. The independent grocery sector is accountable for close to one percent of the nation's overall economy and is responsible for generating $131 billion in sales, 944,000 jobs, $30 billion in wages, and $27 billion in taxes. NGA members include retail and wholesale grocers, state grocers associations, as well as manufacturers and service suppliers. For more information about NGA, visit www.nationalgrocers.org.
Source: The National Grocers Association (NGA)
