FMI – The Food Industry Association announced this week its support of the Federal Reserve Board of Governors’ proposal clarifying debit routing provisions in the Durbin Amendment.
The Debit Card Interchange Fees and Routing proposal seeks to guarantee merchant choice in routing regardless of where or how the transaction occurs.
“For years, banks and credit card companies have been using card fees as a significant profit generator to the detriment of merchants across the country, like food retailers which have historically operated on margins of less than 3 percent,” FMI President and CEO Leslie G. Sarasin said. “Our operations data finds that swipe fees are the second-highest business cost for grocers, a substantial expense on extremely narrow margins that will impact prices, growth, and enhancements.”
Sarasin said the FMI extends gratitude to the Federal Reserve for the opportunity to comment on its proposed clarification while working to ensure a competitive payments marketplace.
Other supported additions to clarify the routing provisions include requiring the enablement of multiple payment card networks for each authentication method; ensuring payment card networks are in accordance with the law regarding payments and incentives to issuing banks; and making regulatory enforcement a priority against any card payment network’s practices or rules limiting a merchant’s routing abilities.
According to a Nilson report filed with the Federal Reserve, combined credit and debit processing fees have escalated, totaling $110.3 billion a year for all types and brands of cards in 2020. Additionally, the events of 2020 drastically accelerated the move to online shopping, with retailers spending $450 million in technology upgrades to support online shopping. Debit card purchase volume alone increased more than 15 percent over that of the prior year to $2.23 trillion in 2020.