Merchants Keep Interchange Savings – Do Consumers Care?

by Mercator Advisory Group 0

In what is a curious and puzzling twist to the debit interchange fee saga, consumers don’t seem too interested in whether or not merchants give back to them any portion of the millions of dollars they’re saving on expenses. Why is that? Are consumers thinking that the discounts they’re being offered, especially now during the holidays, is evidence enough?

According to the EPC, 16 of 21 retailers visited across the country either raised prices or kept them the same before and after the October 1 implementation of the Durbin amendment, which slashed the price that retailers pay to accept debit cards in half.

Overall, customers paid on average 1.7% more after implementation, says Trish Wexler, spokeswoman for the Electronic Payments Coalition, singling out Wal-Mart and Walgreens as high profile transgressors.

It is more likely that consumers are looking at this issue through the lens of their anger and frustration at the state of the economy and the role big banks played in the recession rather than any benefit gained by merchants. Consumers hold merchants accountable for the products they sell, but perhaps have been so well trained to shop for value, that pricing reductions driven by something other than merchant to-merchant competition fall into a dead zone of awareness. Additionally, consumers may think that merchants are entitled to make a profit, but banks are somehow not as evidenced by the Occupy Wall Street movement. Occupy WalMart? Other than Black Friday not too likely.

Click here to read more.

Featured Content