McDonald's Exec: Swipe Fee Reform May End Up Hurting Our Bottom Line

A number of the new or increased banking fees, including Bank of America’s scrapped attempt to charge debit card users $5/month, that have popped up recently have been financial institutions’ reactions to recently enacted regulations that cap swipe fees — the amount banks charge retailers each time a debit card is used to make a purchase. While the goal is to put billions back into retailers’ coffers, some of the nation’s biggest chains say it may end up hurting them.

Previously, the average swipe fee was around $.44 per transaction, but the actual amount per transaction varied for some retailers who would negotiate lower fees for smaller purchases. Now that the average swipe fee has been effectively cut in half, swipe fees are basically standard, regardless of the amount the consumer spends.

Earlier today, a McDonald’s executive said his company, and others that rely on many, smaller purchases, may actually see an increase in the amount they pay in swipe fees.

“I don’t think we gained anything from [the Durbin Amendment],” he said, referring to the legislation that limited the swipe fees.

Speaking at the same forum, a finance guy from 7-Eleven says he expects to see mixed results, as the chain will likely see a benefit when customers buy gas with their debit card, but could see a negative impact for small, in-store purchases.

“It’s unclear, overall, whether we will benefit,” he said.

Walmart’s treasurer was a little more upbeat, saying the Durbin Amendment will hopefully lead to reform in the swipe fees charged by credit card companies.

“It’s a good first start,” he said.

All the execs did state that any savings they see from the swipe fee reform would be passed along to the consumer.

Wal-Mart, McDonald’s execs sour on new debit rules [Chicago Tribune]