Savings retailers are seeing from the 2011 legislation that set a 21-cent debit-card swipe fee cap are being passed on to customers, according to results from a recent National Retail Federation study.
But outdoor and fitness retailers aren't among them. Swipe fee legislation hasn’t caused any significant savings for specialty outdoor and fitness retailers the SNEWS team talked to, mostly because products sold in both channels tend to be pricier, causing consumers to shop with credit cards versus debit cards.
The legislation, which passed in October 2011 as part of the Dodd-Frank Wall Street Reform Act, capped the amount banks could charge retailers for consumer debit card purchases at 21 cents, but credit card swipe fees still run amok. The NRF had initially proposed a 12-cent cap, but after successful lobbying by banks, that cap was raised.
“It’s really been a non-event for us,” said Andrew Leshik, director of sales and marketing for fitness retail chain Leisure Fitness. “Most of our transactions are still credit cards — very few are debit cards.”
Wes Allen, owner of Sunlight Sports in Cody, Wyo., said the legislation hasn’t made an impact.
“That legislation was a missed opportunity because the credit card companies’ lobbying efforts really took the teeth out of a lot of it,” Allen said, adding that credit card fees should be capped.
“Those full-feature, miles credit cards — retailers are the ones that pay for that,” Allen said of rewards cards. “Any incremental savings that retailers see [from debit card swipe fee cap] – especially independently owned retailers – aren’t as big a deal because of the increased prices we pay for full-feature credit cards.
“We always pass on our savings to customers,” he added, “but this isn’t significant enough that retailers are going to be able to do that.”
That's not the case with other industries.
"We have been hearing anecdotally from retailers for the past couple of years about ways they’ve passed on savings with customers,” said Craig Shearman, NRF's vice president of government affairs and public relations.
The NRF's study, conducted by Economist Robert Shapiro, found that retailers in other industries dealing in debit card transaction fees have seen significant savings. Shearman said the study’s economists determined the cap led to the creation of 13,000 new jobs thanks to a savings of $8.5 billion in 2012 on debit-card swipe fees. The study also found those retailers passed along $5.87 billion of that savings to customers.
“Not only have the savings been passed on to consumers, there have been significant benefits to the economy in terms of job creation,” Shearman said, adding that if the NRF had gotten the original 12-cent-per-swipe fee cap it wanted those numbers would be higher.
Shearman acknowledged not all retailers in all industries are seeing the same results.
“Small retailers are hit harder,” he said. “Smaller retailers pay a higher rate than a national chain would pay” for credit card swipe fees.
With the credit card companies and banks continuing to try to overturn the cap and raise credit card swipe fees, the fight against them will continue, Shearman said.
“We’re certainly starting to see some victories and raise awareness of the issue,” Shearman said, “but it’s not over yet.”