Grocers Propose Policy Solutions to Lower Debit Swipe Fee

Arlington, VA - Recently, FMI – The Food Industry Association filed extensive comments with the Federal Reserve Board of Governors on its proposed rulemaking to lower the debit regulated rate, the swipe fee that grocers and other merchants pay for accepting debit cards for transactions. 

“The debit regulated rate was initially set by the Federal Reserve in 2011. Since then, the Fed’s own data has shown that banks’ costs to process debit transactions have gone down dramatically, while the rates charged to food retailers for the same debit transactions have not been adjusted prior to this proposed rulemaking,” said FMI President and CEO Leslie G. Sarasin. 

Sarasin continued, “Ensuring a ‘reasonable and proportional’ debit regulated rate, as required by law, is critically important to keeping prices low for customers in the slim-margined grocery industry.”   

FMI, along with the National Association of Convenience Stores (NACS), filed a joint petition on December 22, 2022, to call for this rulemaking. Sarasin subsequently welcomed the Board’s 6-1 vote to advance the proposed rulemaking in October 2023.  

FMI’s comment letter noted that, as written, the debit regulated rate and methodologies used to set automatic fee updates under the proposed rule do not reflect a "reasonable and proportional" level as mandated by the Dodd-Frank Act and supported by Federal Reserve data and should be revised to lower the overall swipe fee on merchants. 

The Federal Reserve’s data shows that banks’ cost for processing a debit transaction is 3.9 cents, far below the proposed base component of 14.4 cents, the largest of the three components that comprise the debit regulated rate. FMI requested a decrease in this base component and recommended modifications to the other rate components, which as proposed require merchants to continue to pre-pay banks for potential fraud losses and fraud prevention costs despite banks increasingly charging back the burden onto merchants when fraud occurs. 

The full text of FMI’s debit rulemaking comment letter is available here. The Merchants Payments Coalition (MPC), which FMI co-leads, also filed a comment letter. The MPC comment letter and press statement are available here.