The Merchants Payments Coalition, which supports the reforms that created more transparency in the debit-card business, welcomes the news that Home Depot joins the nation's retailers large and small in passing savings from reform of debit cards to its customers.
The nation's fourth-largest retailer has cut prices on more than 3,000 products since the Durbin Amendment lowered bank fees on debit-card transactions, or "swipe fees," starting in October.
"The money saved [by] Durbin goes into the pool of savings, lowers our overall operating costs and allows us to reinvest in the business to lower prices," said Dwaine Kimmet, Home Depot's treasurer and vice president of credit, to American Banker recently.
The big banks claim merchants are sitting on the savings from reforming swipe fees, but publicly held retailers can refute that lie in their reported financial results.
Their operating margins, for instance, would have risen were retailers sitting on savings, merchants say. But in fact margins have shrunk since October because retailers like Target, Sears, Walmart and Lowe's must constantly compete on prices or lose business.
"The evidence is plain that more transparency and competition on debit-card swipe fees has helped customers," said Doug Kantor, counsel to the Merchants Payments Coalition.
And swipe fees still remain a huge cost to merchants from Main Street mom-and-pops to retail chains. Atlanta-based Home Depot reports the fees are its third-highest operating cost after labor and real estate.
American merchants pay the highest swipe fees in the world, and for many card fees are their second-highest operating cost.
Other publications have also picked up on the savings story and reporting that merchants big and small are discounting thanks to reform. USA Today reported recently that gas stations, including Nice N Easy and some Exxon and Arco stations, advertise lower prices for customers who pay with cash or a debit card instead of a credit card. And Swedish furniture store IKEA offers savings vouchers on customers' next purchase when they pay with a debit card.
Lower prices bring more customers to stores, boosting retailing, which is a huge chunk of the economy.
Consumers are also saving on bank fees following the reforms. According to a study of checking account fees at the 50 largest banks and 50 mid-sized and small banks by MoneyRates.com, 39 percent offered free checking in the second half of last year, when debit reform took effect, up from only 35 percent in the first half.
And checking account fees also got cheaper, the survey found, with the average cost falling almost 50 cents to $11.28 from $11.75 in the first half.
"Now we need to bring competition and transparency to credit cards, too, to give some relief to consumers and Main Street businesses from the dysfunctional, anti-competitive credit card market," said Mr. Kantor.
The Merchants Payments Coalition - UnfairCreditCardFees.com - is a group of retailers, supermarkets, drug stores, convenience stores, fuel stations, on-line merchants and other businesses which are fighting against unfair credit card fees and for a more competitive and transparent card system that works better for consumers and merchants alike. The coalition's member associations collectively represent about 2.7 million stores with approximately 50 million employees.
Contacts:
Merchants Payments Coalition
Michael Flagg, 202-253-4164
mike@hintoncommunications.com
