Wal-Mart, McDonald's execs sour on new debit rules
Executives of Wal-Mart Stores Inc and McDonald's Corp say new U.S. rules limiting debit card processing fees will not cut their costs as much as they hoped, and could actually boost their expenses. Treasurers from the world's largest retailer and biggest restaurant chain said at a financial industry conference on Friday that debit card processing costs, or interchange fees, were not low enough despite the new limits to have a real impact on retailers.
The interchange fees that banks charge to merchants were capped on Oct. 1 as a result of the Durbin amendment, a provision of the 2010 Dodd-Frank financial reform law. Under the Durbin amendment, the Federal Reserve capped debit card processing fees at 21 to 24 cents per transaction, roughly half the previous industry average. Banks have said the new rule is a windfall for retailers, moving as much as $8 billion in revenues off lenders' books. But U.S. retailers that rely on a high volume of small dollar transactions could see an increase in their debit card processing costs, because prior debit costs for smaller purchases had lower fees. However, 7-Eleven gas stations and convenience stores will likely see a mixed impact from the capped fees. The world's largest convenience store chain's processing costs for gasoline purchases will likely drop, but costs will likely rise on purchases customers make inside their stores.