The recent Dodd-Frank Financial Regulation Bill that is now law greatly reduced the debit card interchange fees paid by merchants to financial institutions. Lost in all the media discussions and consumer backlash over new banking fees has been the considerable financial windfall to merchants and retailers who accept debit cards as a means of payment.
Since October 1st, merchants and retailers have been enjoying reduced costs when consumers use their debit cards. Are we seeing lower prices with these merchants and retailers yet? An informal review of the prices of milk, bread, and cereal both before and after October 1st do not reveal that any cost savings are being passed along to the consumer. Consumers should look closely at 4th quarter earnings later this year for major retailers as there will be a significant increase in net incomes being reported as a result of the debit card interchange fee reductions.
The retail industry is the group who lobbied hard for the debit card fee reductions. They won that fight and are now enjoying the fruits of that victory. It remains to be seen however if the consumers will share any benefits of that retailer victory. Time will tell on that issue.
Those banking institutions most affected by the reduced income of the debit card interchange changes are passing along those costs to their consumers. North Alabama Educators Credit Union has not been forced to initiate new checking and debit card usage fees because our income has not been affected yet by the changes. Legislators in Congress were fully informed of probable new banking fees to consumers if the Dodd-Frank Financial Regulation Bill became law so it is quite disingenuous for legislators to now appear surprised by new banking fees.