FMI Expresses Extreme Disappointment in the Federal Reserve Ruling

ARLINGTON, VA—June 29, 2011— In its final rule issued today on the subject of interchange fee reform, the Board of Governors of the Federal Reserve undermined the intended benefits of the Dodd-Frank Wall Street Reform and Consumer Protection Act as it relates to debit card swipe fees. This ruling prolongs the struggle for small businesses to bring parity to the debit card market.

“Today the voice of big banks drowned out the cries of consumers and Main Street merchants in the ears of the Federal Reserve,” says Leslie G. Sarasin, president and chief executive officer of FMI. “This ruling is inconsistent with the proposed ruling issued last December and utterly fails to be true to the spirit of the Dodd-Frank Wall Street Reform and Consumer Protection Act passed more than a year ago. It will not provide sufficient reform for businesses that are currently fighting high debit swipe fees. Merchants and customers across America are the big losers today.”

“The action taken by the Federal Reserve today, rather than bringing parity to an unfair situation, actually makes it worse by increasing the costs on the most secure PIN debt transactions,” says FMI Senior Vice President for Government Relations Jennifer Hatcher. “It is irresponsible and certainly not reasonable.”

For years, big banks and the giant credit card networks used hidden swipe fees and fine print to keep consumers in the dark regarding the actual costs of using their debit cards. The disparity between the bank-determined fees assessed for processing paper checks and electronic checks has cost merchants and consumers nearly $20 billion each year. In addition, merchants are charged on average 44 cents to complete a debit-card transaction that costs just 4 cents to process. Closing the gap on these charges would have benefited small businesses and allowed them to put more savings in the pockets of their customers.

Even though FMI expresses our extreme disappointment with the Federal Reserve's final ruling, FMI wishes to thank Senator Richard J. Durbin (D- Ill) for his dedicated efforts to bring fairness and much needed reform to debit card swipe fees.