The American Bankers Association, the Bank Policy Institute and seven financial industry associations today released a new “myth vs. fact” guide to debit card interchange in response to a Federal Reserve proposal to significantly lower the cap on interchange fees.
The Fed last year proposed revising Regulation II to lower debit interchange fees by almost 30% and institute a biennial review of the cap without accompanying public comment each time. In the fact sheet, the associations dispel myths being spread by merchants and other supporters of the rule change, including that the proposal wouldn’t harm consumers, or that lowering the cap means that merchants will lower their prices.
“Studies repeatedly show that after Regulation II was enacted in 2011, merchants reneged on their promise to consumers and did not lower the prices of consumer goods,” the associations said. They point to one study that found that 75% of merchants didn’t change prices as a result of Regulation II, as well as to other research finding that in 2016 alone, merchants pocketed $42 billion in savings that could have gone to consumers.
