The move by the Senate yesterday not to delay the 80 percent cut in the debit card swipe fee could have a big impact on consumers. A primer on swipe fees:
Q: What are swipe fees, anyway?
A: The money banks like JPMorgan Chase, Wells Fargo and Bank of America charge retailers on every purchase you make with your debit card.
Q: Why are banks charging re tailers a fee for debit transactions?
A: Banks argue that they charge so-called swipe, or inter change fees, to retailers in order to cover the cost of processing the electronic transaction, including cov ering losses from fraud — both preventing it and re paying customers when their card has been used fraudulently.
Q: What are banks whining about?
A: Banks argue that without the fees they collect from retailers, they can’t afford to cover the cost of offering debit cards or providing protections against fraud.
Q: What does that mean to me?
A: Well, big banks have said that if they can’t tap retailers to cover fraud costs, then bank customers will have to foot the bill to make up the bank’s losses on swipe fees.
Q: How do banks plan on making up lost revenues?
A: At least a couple of ways. Some banks plan on eliminating free checking (some have already done so) or limiting debit card purchases to $50 or $100 per transaction to contain their fraud losses, a move first reported in The Post. Some banks have even suggested that they might have to eliminate offering debit cards altogether.
Q: What? No debit cards at all?
A: Banks say that if they can’t protect against fraud, they simply can’t afford to take the risk of offering them.
Q: How else am I going to be im pacted by the cut in swipe fees?
A: David French, lead lobbyist for the National Retail Federation, said that the average consumer pays $27 a year in additional costs because retailers charge more to cover the cost of debit transaction fees. Consumers’ dollars are going to go further whether shopping at Food Lion, Sears or Modell’s Sporting Goods.