US Supreme Court rejects swipe fee complaints
January 20, 2015

Swipe fees are charged to merchants when customers use their credit or debit cards to make purchases. The National Retail Federation, a trade association associated with retail, reported that in July 2013, the fees charged for payment processing were determined unreasonable. Previous fees averaged around 44 cents per transaction.

"From the very beginning, retailers and restaurants knew the Federal Reserve Board of Governors had grossly misapplied the swipe fee law, also known as the Durbin Amendment," Mallory Duncan, the senior vice president and general counsel on the U.S. District, told Reuters. "They failed to heed Congress' call to set fee standards that were 'reasonable' and 'proportional' to the actual cost of a transaction."

Reuters reported that on Jan. 20, 2015, the U.S. Supreme Court rejected the challenge to swipe fee rules.

Historical debate regarding swipe fees
As mentioned above, swipe fees have been a point of dispute for years. Fees were lowered to a 21-cent cap in hopes for lower prices for consumers. However, Reuters reported many merchants challenged whether this was just. They disputed whether the fees charged more than the actual cost associated with payment processing.

Duncan told the news source that the Supreme Court's decision translates into billions of extra dollars continuing to be charged to merchants. This ultimately costs consumers money when they shop for products and services.

The Durbin Amendment
The suggestion to lower fees charged by banks for payment processing to a more reasonable amount, consequently lowering costs for the average consumer, was referred to as the Durbin Amendment and was initiated in 2010, according to NerdWallet.

The fee is determined by whether a patron uses a debit card or rewards card, makes a purchase online or uses a PIN. The intention of a swiping fee is to cover the potential of a fraudulent transaction.

Merchants and bank officials argue whether the Durbin Amendment successfully passed savings off to consumers. Fox Business reported that the head of the Consumer Bankers Association, Richard Hunt, believed retailers and merchants had not yet proven that savings accumulated through lower swipe fees had been distributed toward more affordable consumer purchases.

Moving forward
Despite the swipe fees associated with payment processing, overall sales and convenience can boost your profit. With the correct payment processing provider, you can manage expenses and increase revenue with available technology. Providing your consumers with payment options can encourage more purchases.

Nexus: G-WEBCD2