Wednesday, December 14, 2011 10:00:00 AM
Aspire FCU CEO Tom O'Shea is wondering where all the savings that retailers were going to pass on because of the new debit card interchange cap have gone?
As credit unions are aware, Illinois Senator Dick Durbin spearheaded a cap on debit card interchange transactions. Big box retailers cried foul about out-of-control interchange costs hurting their businesses and hindering them from lowering product prices. The Durbin amendment passed as part of Dodd-Frank and debit card transactions are now capped at 21 cents.
Pictured above are the results of O'Shea's investigation into gas prices in New Jersey based on forms of payment. (Enlarge)
Despite the cap and the billions in savings retailers are now experiencing, O'Shea challenges anyone to find those savings in the marketplace. O'Shea did his own mini investigation of gas prices in the New Jersey market and found the same eight cent differential between cash and any form of debit or credit transaction. "Hopefully there will be an in-depth analysis of the effect on product pricing post-Durbin. Clearly in the cases I looked at there was absolutely no impact," said O'Shea.
There has already been many reports of companies actually raising consumer prices because Visa and MasterCard no longer offer a small transaction discount to retailers for purchases under $10. On the banking side, Bank of America's infamous attempt at a $5 monthly fee for customers that use their debit card even once a month was in response to the new cap on debit card interchange.