Savings Projected From Debit-Fee Reform

Supermarkets could see savings of 5% to 10% of earnings as a result of new rules for debit-card interchange fees, according to an analysis by investment firm Credit Suisse.

Supermarkets could see savings of 5% to 10% of earnings as a result of new rules [3] for debit-card interchange fees, according to an analysis by investment firm Credit Suisse.

In an article published by Barron’s this week, Credit Suisse analysts said the so-called Durbin Amendment of the massive financial reform legislation passed this year is estimated to reduce interchange fees that payment networks charge retailers by 70% to 80%, based on a preliminary draft by the Federal Reserve this month.

The Fed proposed capping debt fees at 12 cents per transaction, based on analysis of the actual cost, although it said it was still considering possible added costs associated with fraud protection.

“Supermarkets have historically received preferential treatment over other retailers on interchange fees, but the industry should still be one of the largest beneficiaries given their strong debit-card mix (50% of sales) and high-transaction volumes,” the analysts wrote.

Drug stores will also benefit, they said, with projected savings of 2% to 5% of earnings.