WASHINGTON - The Merchants Payments Coalition welcomed news this week that Home Depot joined the nation€™s retailers, both large and small, in passing savings from debit card reform on to its customers.
The nation€™s fourth-largest retailer has cut prices on more than 3,000 products since the Durbin Amendment lowered bank fees on debit-card transactions, or "swipe fees," starting in October.
"The money saved [by] Durbin goes into the pool of savings, lowers our overall operating costs and allows us to reinvest in the business to lower prices," Dwaine Kimmet, Home Depot€™s treasurer and vice president of credit, told American Banker recently.
The big banks claim that merchants are hoarding the debit card swipe fees savings, but publicly held retailers like Home Depot can refute that claim in their reported financial results. Their operating margins, for instance, would have risen if retailers were in fact sitting on the debit card savings, merchants say. But in fact margins have shrunk since October because retailers like Target, Sears, Walmart and Lowe€™s must constantly compete on prices or risk losing business.
"The evidence is plain that more transparency and competition on debit card swipe fees has helped customers," said Doug Kantor, counsel to the Merchants Payments Coalition, in a press release.
Other publications have also picked up on the savings story and report that merchants big and small are discounting thanks to debit swipe fee reform. USA Today reported recently that gas stations, including Nice N Easy and some Exxon and Arco stations, advertise lower prices for customers who pay with cash or a debit card instead of a credit card. And Swedish furniture store IKEA offers savings vouchers on customers€™ next purchase when they pay with a debit card.
Lower prices bring more customers to stores and boosts retailing, which is a huge chunk of the economy. Consumers are also saving on bank fees following the reforms. According to a study of checking account fees at the 50 largest banks and 50 mid-sized and small banks by MoneyRates.com, 39% offered free checking in the second half of last year, when debit reform took effect, up from only 35% in the first half.
And checking account fees also got cheaper, the survey found, with the average cost falling almost 50 cents to $11.28 from $11.75 in the first half.
"Now we need to bring competition and transparency to credit cards, too, to give some relief to consumers and Main Street businesses from the dysfunctional, anti-competitive credit card market," said Kantor.