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The Merchants Payments Coalition (MPC) today applauded the comprehensive approach taken by the Kansas City Federal Reserve in its report, “The New Debit Card Regulations: Effects on Merchants, Consumers and Payments System Efficiency.”

The report concluded that more time and data are needed to assess the overall consumer and merchant benefits of debit reform, while noting that debit reform has started to create more efficiencies in the electronic payment marketplace by increasing competition among payment processors.

“In contrast to disingenuous, under-researched so-called reports from groups backed by the credit card and banking industry, the Kansas City Federal Reserve took a methodical approach to looking at the impact of debit regulations,” noted Doug Kantor, counsel to MPC. “Overall, the report affirms that debit reform has increased competition in payment processing and brought important new limits and oversight to a fee structure that , prior to reform, undermined efficiency and harmed merchants and consumers alike.”

Key findings in the report include:

Debit reforms have resulted in marketplace shifts that are increasing competition and changing the incentives for payment processors in a way that is lowering the costs to merchants and consumers and increasing efficiencies.


The effects of the new debit card regulations on merchants vary significantly across different types of merchants. For example, grocery and gasoline retailers are seeing less savings than other merchants because their interchange rates pre-reform were closer to the post-reform rates.


Merchants, such as coffee shops and quick service restaurants, that have a large volume of low dollar transactions are seeing increased debit fees because of the way payment processors have responded to the Federal Reserve’s regulations implementing debit reform. The Federal Reserve’s implementation of the final rule is being challenged in court.


Merchants that are realizing savings from debit reform are looking at different ways to pass those saving on to consumers. For example, the convenience store industry has already been implementing discounts for cash and debit transactions.


The report mirrors previous findings by the Federal Reserve, Federal Trade Commission, and the Government Accountability Office that the small bank exemption is worki
“Thanks to debit reform, many merchants are starting to get relief from unfair, exorbitant debit swipe fees,” commented Scott DeFife, executive vice president for policy and government affairs at the National Restaurant Association. “Debit reform as it stands today is a good first step toward fixing a broken market, but much more can be done to create a fair, transparent and competitive market that benefits consumers and merchants.”

Source: Merchants Payments Coalition
http://www.unfaircreditcardfees.com/site/press/kansas_city_federal_reserve_finds_debit_reform_increased_payment_market_eff