What are ‘Swipe Fees?’
‘Swipe’ or ‘Interchange’ fees are an invention of credit/debit card companies which heretofore have cost consumers and businesses 2% of a transaction’s value, every time a purchase was made. These swipe fees were seven times larger than what banks were charging to access an Automatic Teller Machine.
Overall, more than $20 billion was being surreptitiously siphoned away each year by swipe fees. US ‘swipe fees’ were two to three times higher than in other similarly-situated nations. US ‘swipe fees’ were known to be both unreasonable and disproportionate, because they greatly exceeded the actual cost of the credit service provided. These hidden fees were manifesting themselves as unnecessarily higher costs for goods and services, including gasoline!
Consumers’ Victory in the US Senate
Debit cards are a critical component of America’s retail payment system. They benefit cardholders, merchants, and banks. Over the past decade, consumers have increasingly utilized debit cards, rather than checks or credit cards. Debit cards are accepted at about 8 million merchant locations in the US and are now, by a wide margin, a preferred method of noncash payments in our country. The Federal Reserve reports that US debit card volume likely exceeded 50 billion transactions in 2011, and that their use is accelerating at double-digit rates.
Until recently, US debit card fees were widely recognized to be exorbitantly high. Tesoro Corporation, on behalf of its customers and retailers, actively participated in advancing the successful efforts to moderate unreasonably high swipe fees.
Fortunately, on June 8th, 2011, the US Senate rejected, on a bipartisan basis, an amendment supported by the banking industry which would have delayed consumer relief via a study, rather than to actually reform their costly debit-card fees. These fees were adding $1.3 billion in extra costs each month to consumers and retailers, who had no viable choice but to pay them. The Senate vote cleared the way for important new US Federal Reserve regulations, which took effect in July of 2011. As a result, Americans’ cost of debit card transactions in the US dropped by 72%!
Tesoro opposed the banking industry efforts, which many observers described as one of 2011’s biggest battles on Capitol Hill. Senators representing states in which Tesoro operates facilities and who stood with us against the banks were Barbara Boxer (D-CA), Dianne Feinstein (D-CA), Daniel Inouye (D-HI), Kent Conrad (D-ND), Patty Murray (D-WA), and Maria Cantwell (D-WA). We also greatly appreciate all those who communicated their views to their US Senators. Your voice clearly made the difference in this outcome. Thank you