Aug 10, 2021

ARLINGTON, VA – Today, FMI – the Food Industry Association submitted comments to the U.S. Federal Reserve Board of Governors’ filing, “Debit Card Interchange Fees and Routing,” in support of its proposal clarifying that the debit routing provisions in the Durbin Amendment should guarantee merchant choice in routing regardless of where or how the transaction occurs.

Since the law went into effect in 2010, banks’ costs, as reported to the Federal Reserve, have gone down by approximately half to process debit payments, while the regulated prices charged to merchants for the same debit payments remained unchanged. Combined credit and debit processing fees have escalated, resulting in most merchants’ second-highest cost after labor, totaling $110.3 billion a year for all types and brands of cards in 2020, according to Nilson.  Furthermore, 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% over that of the prior year to $2.23 trillion in 2020.

In its comments, FMI supports the Federal Reserve’s proposal while urging the following additions to clarify the routing provisions:

  • Require the enablement of multiple payment card networks for each authentication method;
  • Ensure payment card networks comply with the law regarding payments and incentives to issuing banks;
  • Make regulatory enforcement a priority against any card payment network’s practices or rules that limit a merchant’s routing abilities; and,
  • Reduce the regulated debit rate to proportionately reflect covered issuers costs as required by law.

FMI President and CEO Leslie G. Sarasin stated, “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%. 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. We thank the Federal Reserve for providing the opportunity to comment on its proposed clarification, and we look forward to continuing to work with the agency to ensure a competitive, efficient, secure payments marketplace.”