Wednesday, March 16, 2011;
Michelle Singletary's March 10 Color of Money column, "In the battle over debit card swipe fees, consumers will be the losers," accurately explains the current debate over interchange, or swipe, fees charged to merchants or service providers when they accept a debit card. But the column grossly understated the impact the Federal Reserve's rule will have on consumers.
As Ms. Singletary herself pointed out, there's no guarantee that merchants will pass on to consumers any of the billions of dollars in savings they'll get if the Fed's proposal is implemented. But she also notes concerns expressed by financial institutions that debit cards will be more expensive and less convenient if the rule goes through. Hence, the only real conclusion that can be drawn is that consumers will lose while merchants, particularly big-box retailers, will enjoy a windfall.
It is important to note that merchants can offer discounts for customers who pay with cash or checks but generally don't because they value the increased efficiency, higher sales volume and protection against fraud that come with accepting debit cards. There is also the danger for consumers of carrying cash, which can be lost or stolen, to consider.
Consumers have more control than they recognize, and they should exercise it. But the government should never have engaged in this fight between two businesses to begin with.
C. Richard Miller Jr., Woodsboro, Md.
The writer is president and chief executive of Woodsboro Bank.
Michelle Singletary usually gets it just right. But in this instance, we disagree with her. Consumers will benefit if the Federal Reserve issues a final rule to reduce debit card interchange fees.
The supermarket industry operates on a 1.5 percent profit margin in a very competitive environment. Swipe fees are one of the highest business costs that supermarkets battle in the effort to keep prices down. Last year, debit swipe fee rates for some of our smallest grocery-store members increased 35 percent, with no recourse for the retailers. They have no choice but to build that cost into the price of goods and services.
While many factors affect prices in our stores, when a major business expense decreases, consumers generally benefit from lower prices at the store as supermarkets strive to remain competitive.
So lower swipe fees are a win for consumers.
Leslie G. Sarasin, Arlington
The writer is president and chief executive of the Food Marketing Institute.