FTC Finds Small Banks Not Hurt by Debit Reform

WASHINGTON, D.C. -- Despite some early fears that debit swipe fee reform would have a negative impact on small banks, the new rules for debit card transaction fees did not harm them at all. In fact, a new report by the Federal Trade Commission (FTC) found that small banks are charging more in debit card swipe fees than their competitors.

One concern that was continually raised during the 2011 swipe fee reform debate was the affect it would have on small banks and municipal credit unions. The retail community said that the new rules, under which banks with less than $10 billion in assets are exempt, would not harm small banks despite arguments to the contrary from the banking community.

"The FTC report confirms what merchants have been saying all along, that after the reforms small banks and credit unions would not only not be harmed by debit but also would benefit from reform, along with consumers, merchants and the overall economy," said Doug Kantor, counsel to the Merchants Payments Coalition, a group of retailers and merchants concerned about rising credit card swipe fees.

The FTC also announced it is investigating Visa, MasterCard and other card processors to determine if they have violated the law by disrupting merchants' choice of networks to handle transactions. The regulatory agency is working with the U.S. Department of Justice (DOJ) in its investigation, according to a news release.

The report said the agency had uncovered information from "public sources as well as industry participants" that certain practices by the credit card industry may "operate as a penalty" against merchants' routing of card payments.

In May, Visa revealed a DOJ antitrust probe into one of its newly adopted fees, known as the Fixed Acquirer Network Fee.