NRF Says Overturning Dodd-Frank Would Reinstitute Price Fixing by Card Companies

June 7, 2016 WASHINGTON – The National Retail Federation today released the following statement after Rep. Jeb Hensarling, chairman of the House Financial Services Committee, announced plans to repeal swipe-fee reform and the Dodd-Frank Wall Street Reform Act.

“Today Jeb Hensarling announced that he wants to repeal an important competitive change in Dodd-Frank reform and return to the bad old days when card companies and banks freely picked the public’s pocket,” NRF Senior Vice President and General Counsel Mallory Duncan said.


“Protecting bank profit margins at the expense of competition is not sound public policy and it will harm merchants and consumers. The financial services industry attempted to get Congress to reject transparency and competition in 2010 and again in 2011. Both efforts failed. On behalf of retailers and their customers, NRF will fight for free and open markets.”

Swipe fees on debit and credit cards are many retailers’ second-largest operating cost, behind labor. These fees threaten small retailers with failure and keep merchants from hiring and expanding, slowing the entire economy. Exorbitant swipe fees also mean consumers pay higher prices. American merchants and consumers still pay the highest swipe fees in the world on debit and credit cards, according to the Federal Reserve Bank of Kansas City.

Under the Dodd-Frank Consumer Protection and Wall Street Reform Act of 2010, the Federal Reserve was required to adopt regulations that would result in debit swipe fees that were “reasonable and proportional” to the actual cost of processing a transaction. Federal Reserve staff calculated the average cost at 4 cents per transaction and proposed a cap no higher than 12 cents. Nonetheless, after heavy lobbying from banks the Federal Reserve Board of Governors eventually settled on 21 cents plus 0.05 percent of the transaction for fraud recovery and allowed another 1 cent for fraud prevention in most cases. The cap, which applies only to financial institutions with $10 billion or more in assets, took effect in 2011 and totals about 24 cents on a typical debit card transaction.

NRF is the world’s largest retail trade association, representing discount and department stores, home goods and specialty stores, Main Street merchants, grocers, wholesalers, chain restaurants and Internet retailers from the United States and more than 45 countries. Retail is the nation’s largest private sector employer, supporting one in four U.S. jobs – 42 million working Americans. Contributing $2.6 trillion to annual GDP, retail is a daily barometer for the nation’s economy. NRF’s This is Retail campaign highlights the industry’s opportunities for life-long careers, how retailers strengthen communities, and the critical role that retail plays in driving innovation.


Visa and PULSE Agree on EMV Common Debit Solution

EMV Debit Solution Helps Accelerate Chip Technology Adoption in the U.S.

Foster City, Calif. and Houston, Texas, March 21, 2014 – Visa Inc. (NYSE: V) and PULSE, a Discover Financial Services (NYSE: DFS) company, announced an agreement to enable financial institutions that issue EMV debit cards on both the Visa and PULSE networks to use Visa’s common debit solution. Visa’s common application identifier (AID) supports U.S. debit regulations requiring the ability to route transactions over multiple, unaffiliated networks. A common debit solution shared among all participants will help to accelerate EMV chip adoption in the United States and provide a uniform platform that will enable network innovation.

“It’s important for the industry to work together, especially when it comes to the adoption of EMV chip,” said Bill Sheedy, executive vice president of Corporate Strategy and Government Relations, Visa Inc. “Our common solution is an asset we are making available to the industry free of charge to provide issuers and merchants greater choice among debit networks, and enable a streamlined implementation for all parties. The addition of PULSE in Visa’s EMV common debit solution, which now has been adopted by 4 of the top 5 debit networks, provides a level of clarity that we hope will jump start mainstream adoption of EMV technology for debit in the U.S.”

“Our network has been EMV-capable since October 2013, which will enable us to support transactions using the Visa common AID with minimal updates to our existing specification,” said Judith McGuire, executive vice president, Product Management, PULSE. “With this agreement, merchants and acquirers can develop their systems to support the full range of debit routing options available through PULSE, including PIN, signature and PINless transactions.”

Patricia Hewitt, vice president and managing director of consulting services at Mercator Advisory Group, said, “This agreement addresses the uncertainty that has plagued the advancement of EMV for the U.S. debit market and signals that the industry is ready to move forward with the broad adoption of EMV technology among U.S. debit issuers and acquirers.”

PULSE will use functionality on Visa’s common AID to facilitate all types of point-of-sale debit transactions on its network. In addition, the agreement enables PULSE to facilitate domestic ATM transactions on its network and provides for issuer choice in the routing of ATM transactions.

About Visa Inc.

Visa is a global payments technology company that connects consumers, businesses, financial institutions, and governments in more than 200 countries and territories to fast, secure and reliable electronic payments. We operate one of the world’s most advanced processing networks – VisaNet – that is capable of handling more than 30,000 transaction messages a second, with fraud protection for consumers and assured payment for merchants. Visa is not a bank and does not issue cards, extend credit or set rates and fees for consumers. Visa’s innovations, however, enable its financial institution customers to offer consumers more choices: pay now with debit, ahead of time with prepaid or later with credit products. For more information, visit


PULSE, a Discover Financial Services (NYSE: DFS) company, is a leading debit/ATM network, serving approximately 6,100 financial institutions across the United States. This includes more than 4,100 issuers with which PULSE has direct relationships and 2,000 additional issuers through agreements PULSE has with other debit networks. PULSE links cardholders with ATMs and POS terminals at retail locations nationwide. Through its global ATM network, PULSE provides worldwide cash access for Diners Club and Discover cardholders through 1.3 million ATM locations. The company also is a source of electronic payments research and is committed to providing its participants with education on emerging products, services and trends in the payments industry. For more information, visit

Interlink debit fees to increase April 2010

As merchants combat high interchange fees by increasing debit penetration, the debit networks are quietly increasing their fees at the same time. Interlink is the latest debit network to announce an increase.

For tier 4 merchants, the rate goes from 75 basis points and $.17 per transaction to 95 basis points and $.20, There is no cap on the percentage fee charged. That’s $.0095 times the transaction amount plus the per item fee. Compare this to the debit interchange cost of 1.03% and $.10 per transaction and it’s obvious the numbers are getting closer.

Merchants will need to weigh cost and risk to make decisions about pushing pin debit. With pin debit, all risk is removed from the merchant for chargebacks.

New rates are effective April 16, 2010.

Visa responds to GAO Report on Interchange

San Francisco – Nov. 19, 2009 “Visa appreciates Congress’ desire to better understand the electronic payments industry and welcomes the release of this second Government Accountability Office (GAO) study on interchange and the electronic payments industry. We are pleased that for the second time in two years, the GAO has seen no need to call for Congressional intervention to regulate interchange.

“Not surprisingly, the GAO reached many of the same conclusions found in its previous report, including:

  • Merchants benefit from electronic payments through increased sales, faster checkout times, as well as greater convenience.
  • Consumers benefit from the convenience of electronic payments over cash and checks, providing improved theft and loss prevention, and easy record keeping.
  • Interchange is important to community banks and credit unions, providing them with the ability to offer card programs and benefits on par with major financial institutions.

“We are encouraged that the GAO report examines consumer impacts and confirms that there is little evidence merchants would pass any potential savings from lower interchange on to consumers.

“We believe the study would have benefited from a more comprehensive analysis of debit given the fact that debit cards account for approximately 70% of Visa transactions in the United States and are among the fastest growing payment products.

“It’s unfortunate that the report doesn’t highlight that Visa’s average interchange rates in the United States have remained generally flat for the last ten years and, more broadly, merchant discount rates overall have declined in the last four years, according to the Nilson report.

“We believe it is important for U.S. policymakers to read this report to better understand how vital interchange is to keeping the electronic payments system reliable, convenient and secure for all participants.  We also hope these findings provide some balance to the efforts by some large retailers and their trade associations who are trying to get Congress to help them increase their profits at the expense of consumers.

“For over 50 years, retailers have received tremendous value from accepting electronic payments, including guaranteed payment, potential for increased sales, faster checkout times, as well as greater convenience and security – all at a fair price.  For these benefits, Visa’s interchange rates average 1.62 percent for each transaction and has remained generally steady for a decade.”


What is pin-less debit?

Pin-less debit comes from online debit transactions that are processed via EFT networks ie STAR, PULSE etc.

In traditional retail if the merchant is maximizing the low cost debit networks, the consumer buys a product in the store and enters their pin number. The merchant is charged a flat fee. If the consumer does not enter their pin number and they sign, the merchant pays a percentage of the transaction.

Pin-less debit is the online solution to the retail pin-entered transaction. The merchant gets the benefit of the flat rate transaction, however the consumer does not enter their pin number because it is usually an Electronic Funds Transfer or Ecommerce transaction.

See also How can I get pinless debit?