A report released on Tuesday by the Merchant Payments Coalition showed that debit card swipe fee reform helped to save merchants and consumers billions of dollars last year—Congress’ desired outcome in passing the law in 2010.
The average debit swipe fee—the amount a bank charges a merchant to process a debit transaction—fell from 48 cents to 24 cents per transaction after debit swipe fee reform took effect in October 2011, leading to nearly $6 billion in consumer savings.
The report found that the reduced cost of swipe fees to merchants led them to lower prices for consumers, which reportedly increased spending to support nearly 38,000 new jobs.
“The facts are in and the numbers don’t lie,” MPC Chairman Mallory Duncan, the senior vice president and general counsel at the National Retail Federation, said. “Debit reform is helping consumers, and both consumers and the economy are big winners. Debit card swipe fees are eating up less of consumers’ purchasing power, and that has yielded significant savings. These are long-term benefits that will steadily boost the U.S. economy.”
Other findings in the report indicate that savings and job gains would have been much higher if swipe fees had been reduced even further to 12 cents, as originally proposed by the Federal Reserve—a move that could have generated another $2.79 billion in consumer savings.
The report also showed that if swipe fees for credit card transactions had been reduced to the level of debit fees, consumers would have seen an extra $15.4 billion in savings as a result of nearly $7 billion in savings to merchants.