ARLINGTON VA – November 22, 2011 – Today, the Food Marketing Institute (FMI) has joined with the National Association of Convenience Stores, the National Retail Federation – and two companies – Boscov’s Department Store and Miller Oil Company – in filing suit to challenge the Federal Reserve’s rule on debit card swipe fees.
The legal challenge is a unified response to the fact that the Federal Reserve’s final rule on swipe fees does not follow the legal requirements in the debit card swipe fee portion of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The final rule did not go far enough; allowing big banks to continue gouging merchants and consumers with unjustifiably high swipe fees and failing to promote the competition among card networks that would help reduce network fees.
“FMI’s members will suffer significant and irreparable monetary injury directly traceable to the Board’s misconstruction of the statute,” FMI General Counsel George Green, said. “The bottom line is that we are fighting back against a rule that ignores the clear language in the law and will put more money in the pockets of the big banks at the expense of retailers and their customers.”
Fast Supermarket Industry Facts in Favor of Swipe Fee Reform:
- Nearly 70 percent of supermarket sales were made using electronic payment. Twenty-eight percent of sales were made with a debit card.
- Approximately 39 percent of all U.S. PIN debit transactions occurred at supermarkets in 2010.
- The food retailing industry, unlike the banking industry, is highly competitive with net profit margins of about one percent.
- The profitability for the food retail sector has been consistent over the past 40 years.
- Pricing reflects real costs, and cost reductions and increases are reflected in consumer prices.
- Total fees paid by supermarkets to accept debit and credit cards in 2010 were roughly $5.68 Billion. That is 1.01 percent of total sales - greater than the industry’s net profit (only 0.98 percent of sales) in 2010.
- Based on total supermarket sales of $563 billion, the industry paid some $1.85 billion in debit card interchange fees last year.
- Debit card fee usage as a percentage of supermarket sales has grown over 28 percent in the past five years.