Consumers and merchants incur a 500 percent mark-up levied by banks and credit card companies every time someone swipes a debit card and these fees directly impact the cost of consumer prices.
A recently released Federal Reserve report noted fees paid to large banks by merchants and their customers are five times the actual cost the banks incur to swipe the card.
The average cost to process a debit transaction is 5 cents, the report found, yet the average actual fees collected on such transactions is 24 cents.
Debit swipe fee reform, passed by Congress in 2010, required the Federal Reserve to ensure fees charged to merchants that accept debit cards, be “reasonable and proportionate” to the cost of the transaction. The law exempted 99 percent of all banks and applied only to those banks with more than $10 billion in assets.
In 2011, the Federal Reserve imposed rules that capped debit swipe fees for non-exempt institutions at roughly 24 cents.
Debit card fees, as well as credit card fees, have skyrocketed upward even as banks’ costs have been falling. Meanwhile, the banks and credit card companies have stacked the deck against merchants and consumers:
Read more about debit and credit reform here: The Facts About Debit Reform, The Facts About Credit Card Swipe Fees and The Facts About Price-Fixing.