By Karen Axelton
Good news for small retailers and other small businesses that accept debit card payments: A cap on debit card swipe fees is scheduled to go into effect on July 21, Fox Business reports.
Swipe fees, which are the fees banks charge retailers whenever a customer uses a bank card to buy something, have been costing retailers as much as 63 cents per debit card transaction without the cap in place. The cap was proposed by the Federal Reserve in December, but attempts were made to delay it.
In March, Fox Business reports, over 100 small retailers visited Capitol Hill to ask Congress not to delay the proposed cap. The business owners contended that saving the cost of exorbitant swipe fees would help them grow their companies and add jobs.
Limiting swipe fees also helps consumers, since businesses pass the cost on to them. In fact, one source in the Fox story estimates that swipe fees cost the average U.S. household $427 annually.
Use of debit cards has grown as banks have instituted rewards programs and other marketing tools to encourage greater use of debiting for even the smallest purchase.
Of course, when banks are forced to cap swipe fees, the reality is that they’ll seek to make a profit elsewhere. Will that help or hurt small business in the end? We’ll have to wait and see.