Consumers may benefit from new interchange fee regulations
Written by Robert White on June 30, 2010 – 7:12 am 
Americans may seen lower prices and savings at retail chains when new interchange fees go into effect
As the hot debate surrounding interchange fees begins to wind down in Congress, it looks as though retailers are poised to win a victory. As the House and Senate reached a compromise on a bill that will essentially lower interchange, or “swipe fees,” for credit and debit card transactions, consumers may be wondering how the new legislation will affect their wallets.
Once the bill is signed into law, merchants will feel some financial relief as the interchange fees – costs that the retailers must pay credit card issuers and banks for each credit or debit transaction – will decline. Currently, fees stand between 1 and 3 percent. Many industry experts contend that the legislation will prompt merchants to lower prices, Reuters said.
According to a study by the Nilson Report, interchange fees paid by merchants for MasterCard and Visa transactions totaled nearly $19.7 billion in 2009.
“Because retailing is such a competitive industry, lower costs for merchants will likely be passed on to customers in the form of lower prices,” according to Reuters.
However, there is some debate as to whether consumer savings will be universal once the legislation goes into effect, with many credit card issuers and some choice retailers saying that prices may actually increase. Credit card reward programs are largely funded by the profits incurred from interchange fees. The new legislation increases the possibility that consumers may see higher annual fees for products that are expensive to lenders and banks, Reuters said.
Some consumers may also see their credit card rewards decline if issuers cannot find a way to fund them.
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