Debit Interchange Regulation Yields No Easy Answers

by Mercator Advisory Group 0

Small ticket merchants, a market that the card networks worked very hard to penetrate, may reconsider accepting debit cards if they end up paying effective interchange rates of 3 percent or more on their low dollar transactions. In recent days, as the reality of new debit interchange fee schedules has begun to sink in, the press has been rife with articles on the damage this could do to merchants who operate in this environment. The official, public fee schedules will not be out until October 1st, but the networks have not signaled these news items are incorrect. Issuers charging fees to use a debit card, merchants turning away from debit – makes cash look good – now that’s progress!

“The mom-and-pop coffee shop that processes lots of $3 transactions is really going to get hurt by this,” said Brian Dodge, a spokesman for the Retail Industry Leaders Association, a trade group that represents the biggest U.S. merchants, including Wal-Mart Stores Inc., Target Corp. and Home Depot Inc.”

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