Austen Jensen, Retail Industry Leaders Association executive vice president, government affairs, issued the following statement ahead of the Federal Reserve’s meeting today where they will discuss lowering the interchange rate on debit transactions for all merchants:
“Current debit transaction fees paid by merchants are outrageously disproportionate to the actual costs incurred by issuers,” Jensen said. “Card networks and the largest banks are charging all merchants $0.22 per transaction yet it costs them $.039 per transaction to process.
“Congress directed the Fed to ensure the rate for debit transactions is reasonable and proportional to the costs incurred by the largest banks. The data overwhelmingly proves that the current rate needs to be lowered. Retailers are working with the Fed as they start the regulatory process to make this happen, and we are confident that the basic math makes this action inevitable. Merchants shouldn’t be forced to pay such absurd mark-ups to simply accept debit cards.”
Transaction costs for the largest banks have fallen almost 50 percent since 2009, when the first report showed ACS costs were $.077 and now a decade later come in at $.039. But they are still able to charge almost 600 percent more per transaction.
In 2019, the base interchange fee exceeded the actual ACS costs for 78.6 percent of financial institutions over $10 billion dollars and 99.4 percent of covered transactions.