“What’s most striking about the increases in credit card “swipe” fee increases taking effect this month is the quietude with which they’re unfolding. Contrast that with last year when the mere suggestion of the interchange fee increases for merchants unleashed a firestorm of protest. Retailer and merchant trade groups issued a wave of press releases filled with outrage that their members might be forced to absorb the hikes just as their businesses were recovering from the pandemic.”

“U.S. merchants large and small are closely watching the Amazon-Visa developments in the UK and hope that U.S. policymakers are doing the same. Few, however, have the size and resources of Amazon that are required to stand up to an entity as powerful as Visa. In fact, retail is an industry of small businesses, with 98 percent of retail companies having fewer than 50 employees and 95 percent having only one location, according to the National Retail Federation. The Small Business Administration says retail is the third-largest small business sector.”

“The Federal Reserve Board told a North Dakota federal court this month that a lawsuit brought against it by retail associations in April over its rules for debit transaction fees seeks belatedly to rehash issues already settled by the D.C. Circuit Court of Appeals in 2014. In a motion to dismiss the lawsuit, the Federal Reserve Board’s lawyers this month contended that not only are the North Dakota Retail Association and North Dakota Petroleum Association seeking to litigate settled law, they also argued the associations are doing so after a statute of limitations on their claims has elapsed.”

“Most of Marqeta’s revenue comes from interchange fees, the costs that merchants pay when their customers use debit cards to make a purchase.  Because of the Durbin Amendment in the 2010 Dodd Frank Act, banks with under $10bn in assets receive higher interchange fees than larger lenders from the transactions.  Fintech start-ups such as Marqeta and Chime, a fast-growing personal finance app in the US, have taken advantage of this discrepancy by partnering with small community banks and taking a cut of the fees.  Marqeta’s largest partner is Sutton Bank, which receives a payment from Marqeta in exchange for the interchange fee. The company also passes on a part of its revenue from interchange fees to Square and other customers.  Some analysts and investors have questioned the long-term viability of the set-up, with the growth of fintech start-ups drawing attention from regulators and large banks.”

“The Merchants Payments Coalition called on the Federal Reserve today to revise debit card swipe fee regulations adopted a decade ago, citing a new Fed report showing banks’ average cost of processing the transactions has fallen by half. MPC also welcomed the Fed’s announcement that it plans to clarify that debit card routing requirements apply to all transactions regardless of whether they take place online, in-store or in another form.”

“For nearly a decade, the Federal Reserve avoided choosing sides in the protracted, high-stakes dispute between banks and retailers over debit card fees. But after the Fed last week embraced one of the main arguments made by merchants, many observers believe that more bad news is coming for large and midsize banks. The Fed is required by law to cap the interchange fees that banks with more than $10 billion in assets can collect when consumers use their debit cards at retailers. Since 2011, the limit has been set at 21 cents, plus 0.05% of the transaction. The central bank has long ignored pleas from both sectors to make changes. But now, in light of a decadelong decline in the banks’ processing costs, the Fed faces growing pressure to lower the price ceiling.”

“Retailers filed a lawsuit today seeking to have the Federal Reserve lower its 10-year-old cap on “swipe” fees banks charge to process debit card transactions, saying the agency wrongly applied federal law and that merchants have paid billions of dollars more than intended by Congress while banks’ costs have fallen…The suit against the Federal Reserve Board of Governors was filed by the North Dakota Retail Association and the North Dakota Petroleum Marketers Association in U.S. District Court in Bismarck. NRF is not a party but Martz is co-counsel in the case…The lawsuit claims the cap is higher than allowed under the Durbin Amendment, a law passed by Congress in 2010 to address a “broken market” of soaring swipe fees set by Visa and Mastercard and lack of competition among the card-issuing banks that receive the fees.”

“Visa Inc. V, 0.76% and Mastercard Inc. MA, -0.12% are postponing planned credit-card fee increases that were set to kick in this year after the plans drew criticism from lawmakers. Citing the continuing effects of the coronavirus pandemic on businesses, Visa and Mastercard said they will hold off on increasing interchange fees for merchants until next April.”

“The U.S. Senator who gave his name nearly a decade ago to a law that caps debit card interchange made it plain Thursday he now has the rates merchants pay for credit card acceptance squarely in his sights. Commenting during a meeting of the Senate Judiciary Committee, which he heads, Sen. Dick Durbin, D-Ill., accused the major card networks of looking to use higher credit card interchange to compensate for the fee income issuers have lost via the 2011 Durbin Amendment.”

“With the two big payment networks set to raise by hundreds of millions of dollars the cost U.S. merchants pay for card acceptance, e-commerce merchants could see fee boosts while some segments—like travel-and-entertainment and low-ticket-value, quick-service merchants—could see some reductions.  In total, rate tweaks scheduled by Visa Inc. and Mastercard Inc. for next month will generate a net $889 million more in so-called interchange costs annually. That’s according to estimates by CMSPi, a retail-payments consultancy. Interchange fees are set by the networks for acquirers, which invariably pass the costs on to merchants.”

“A group of independent grocers is pushing the federal government to rein in credit-card companies charging high fees for online purchases, as web orders for groceries surge during the pandemic. The Canadian Federation of Independent Grocers (CFIG) on Monday sent a letter asking Ottawa to revisit its 2018 agreement with Visa and Mastercard that put a cap on the fees — known as interchange fees — that they can charge retailers.”

“The European Commission makes legally binding Mastercard’s and Visa’s  commitment to reduce “multilateral interchange fees”, or fees charged to retailers when foreigners use their credit or debit cards in EU region. The commitments, which will cut the inter-regional MIFs by on average 40%, “will significantly reduce the costs for retailers in the EEA when they accept payments made with cards issued outside the EEA,” the commission said.”

“But the retailers are now gearing up for the next round in their fight with the payment networks. The settlement addressed only monetary damages associated with the lawsuit. There’s a separate class of merchants fighting for changes to Visa and Mastercard’s business practices.”

“Déjà vu, anyone? Similar to its now-moot predecessor agreement from 2012, the proposed $6.24 billion monetary-damages settlement in a big credit card interchange antitrust case announced Tuesday by Visa Inc. and Mastercard Inc. is drawing diverging reviews from merchants. Based on anecdotal comments and the history of the earlier settlement, small, independent businesses, which in 2005 filed the original class action in the consolidated litigation now known as MDL 1720, are more likely to endorse the pending settlement than big ones.”

“Interchange on debit card transactions has changed relatively little in the nearly seven years since the Durbin Amendment to the 2010 Dodd-Frank Act took effect, but a Federal Reserve report notes one small but interesting recent change. The average interchange fee in 2017 for dual-message transactions on debit cards regulated by the amendment declined slightly while interchange for single-message transactions with regulated cards stayed the same.”