Arlington, VA – Today, FMI – The Food Industry Association welcomed the Federal Reserve Board of Governors’ decision in a 6-1 vote to initiate a proposed rulemaking that would reduce the regulated debit interchange rate and adjust the rate every two years consistent with data. Merchants like grocery stores are required to pay debit interchange fees to process debit card transactions. In December 2022, FMI and the National Association of Convenience Stores (NACS) filed a joint petition urging the Board of Governors to take action to reduce the regulated rate and we have continued to press for this action. FMI President and CEO Leslie G. Sarasin offered the following statement.
“Since the Durbin Amendment went into effect in 2011, banks’ costs to process payments have gone down dramatically, while the regulated capped rates charged to merchants for the same debit payments have never been adjusted. As the law makes clear, collectively set debit rates charged to merchants must be ‘reasonable and proportional’ in relation to the costs incurred by the card issuers and must be adjusted as the costs to banks fall.
“The Federal Reserve’s decision today in response to FMI’s petition is a good first step and is the first time that an adjustment to the regulated rate has been proposed since the implementation of the Dodd-Frank Act in 2011. We also welcome the Board of Governors’ proposal that we recommended in our petition to establish an automatic adjustment every two years based on a transparent, predictable formula grounded in data.
“However, while we appreciate the Board of Governors’ proposal to reduce the regulated rate compared to what merchants and consumers pay today – which are initiated by the largest banks who collectively set rates – the proposed maximum rate of up to 17.7 cents put forth by the Board does little to ease the economic burden on merchants and further shifts fraud prevention costs onto retailers. Simply put, merchants who have installed Visa- and Mastercard-required PCI equipment and have fraud liability should not also be required to pay an increase in the fraud adjustment, as proposed by the Board of Governors.
“FMI looks forward to providing comments to the Federal Reserve on its proposed rate change to bring these fees to a ‘reasonable and proportional’ level as mandated by statute and to continuing to work with the agency to ensure a competitive, efficient, secure payments marketplace.”