Small Merchants Want Card Choice, Not Price Caps, Study Finds

WASHINGTON – Javelin Strategy & Research and the Electronic Payments Coalition (EPC) released a report last week that reveals small merchants are more concerned with value, and less concerned about price, when it comes to the fees that they pay for debit card transactions.

An EPC release says, “Overwhelmingly, small merchants said they were satisfied with the ‘overall low cost’ of their fees, as well as the transparency and value they get from their partners in the interchange system. Merchants also said that they chose those partners for reasons other than price.”

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CUNA seeks repeal of the Durbin Amendment, which requires the Federal Reserve to limit fees charged to retailers for debit card processing. That law has led to a $1.1 billion drop in funds available to provide needed loans, services and better rates to consumers.

Molly Wilkinson, executive director of the Electronic Payments Coalition (EPC), said of the newly released study, “Over and over we’ve seen that the Durbin amendment benefited the largest retailers while Main Street lost. These price controls have unfairly burdened consumers, community financial institutions, and small businesses. By restoring the free market, small merchants will have greater flexibility to find the debit card plan that works for them and their customers.”

The EPC adds that the study stands in stark contrast to claims from retail lobbying groups, which have argued that getting rid of the 2011 price caps for retailers’ would harm small merchants. In fact, the Javelin study found 66% of merchants are satisfied with what that they pay (only 11% were dissatisfied) and that small retailers are even happier “when they are allowed to choose additional benefits even at a greater cost.”

The Javelin/EPC study also shows merchants prefer credit cards—no matter the cost of the purchase—over debit cards even though credit cards tend to have higher costs, further underscoring that price is not the driving factor for merchants.

The Javelin report cautions lawmakers to use value, not price, to determine the health of the interchange market since price controls lead to “potential unintended consequences” that limit choice. Since the Durbin amendment’s implementation, big-box retailers have pocketed $42 billion in revenues, instead of passing along savings to consumers as promised.

The full study is available here.


in Industry News