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Lower Swipe Fees Cut Prices, Create Jobs: NGA

ARLINGTON, Va. — The National Grocers Association here said Tuesday a newly issued economic study demonstrates that lowering debit-card swipe fees reduces prices and creates jobs.

"The study reinforces [the idea] that more needs to be done to correct the mistakes of the Federal Reserve on debit fees and to curtail the excessive credit-card fees that burden America's consumers and merchants," said Peter Larkin, president and chief executive officer of NGA.


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The study, released by the Merchants Payments Coalition — of which NGA is a member — indicates debit-card swipe fee reforms last year lowered consumer prices by $5.8 billion, which led to increased spending, which helped create more than 37,000 new jobs while also saving merchants $2.6 billion.

However, the savings and job gains could have been substantially larger, the study said, had the fees been cut to 12 cents as originally recommended by the Federal Reserve, rather than the current rate of 21 cents plus five basis points of the transaction value. If the cuts had been implemented, the study pointed out, consumer savings would have gone up an additional $2.79 billion, with an additional $1.2 billion in merchant savings, and nearly 18,000 more jobs would have been created.

Read more: NGA Outlines Opposition to Interchange Fee Settlement

Further, the study said, if swipe fees for all credit-card transactions had been held to the same level as debit fees in 2012, consumers would have saved an additional $15.4 billion and merchants would have saved another $6.9 billion, which would have supported creation of 98,600 more jobs per year.

According to Larkin, "While the Federal Reserve Board's rule incorrectly allowed debit swipe fees to be raised on small purchases — and could have produced even more benefits for consumers and merchants by lowering fees to the more reasonable and proportional levels originally proposed [between 5 cents and 12 cents] — this study clearly illustrates consumers and the economy benefitted from the passage of the Durbin Amendment."

That amendment, passed in 2010, said debit fees had to be reasonable and proportional to the cost of processing a transaction, an NGA spokesman explained.

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