Debit Card Swipe Reform Gives Boost to NH Economy

According to a new economic report released yesterday by the Merchants Payments Coalition (MPC), debit card swipe fee reform has accomplished much of what Congress intended when it passed debit reform legislation in 2010 by pumping a significant infusion of savings and jobs into state economies across the country.

The report, named The Costs and Benefits of Half a Loaf: The Economic Effects of Recent Regulation of Debit Card Interchange Fees, can be found at www.unfaircreditcardfees.com.

In NH, the lower debit card swipe fee, which the Federal Reserve dropped from 48 cents per transaction to 24 cents, allowed merchants here to reduce costs, saving consumers $24.6 million and spurring the creation of 158 new jobs in 2012, according to a release by the Retail Merchants Association of NH. The MPC report also measured the potential effect on the U.S. economy had the Federal Reserve followed the language of the law. The Federal Reserve, for example, originally proposed a rate of, at most, 12 cents per debit swipe. In NH alone, $36.3 million would have been generated in consumer savings along with $16.3 million in merchant savings and this would have been sufficient enough to support an additional 75 jobs.

Had credit card swipe fees been reduced to 24 cents per transaction, Granite State consumers would have saved an additional $64.7 million, merchants would have saved another $29 million, and 414 new jobs would have been created last year, according to this report.

“It’s clear that debit card swipe fee reform lowered prices, and its effects are re-energizing Main Street businesses all across New Hampshire,” said Retail Merchants Association of NH President and CEO Nancy Kyle. “It’s imperative that we get this right and keep moving forward with swipe fee reform so that merchants can continue to pass along their savings through lower prices and invigorate consumer spending, our primary economic driver.”

Kyle also says that swipe fee reform is just what small business owners, as it would boost cash reserves and allow them to invest in their stores and expand their employee base.

In addition to the economic report, MPC also released state-by-state numbers for consumer savings, merchant savings and jobs with swipe fees reduced to 24 cents for both debit and credit cards and to 12 cents for debit cards. MPC calculated the state-by-state numbers by distributing them proportionally to states' share of the U.S. gross domestic product.

The report was compiled byeconomist and advisor to Presidents, Prime Ministers and Fortune 100 companies, Robert Shapiro of Sonecon LLC. Shapiro analyzed the Durbin Amendment of the Dodd-Frank “Wall Street Reform and Consumer Act,” which was created to rein in runaway swipe fees levied on merchants and consumers every time a debit card was used to pay for a purchase.