York firms react to Fed ruling
York, PA -
In a final ruling Wednesday, the Federal Reserve voted to limit the fees banks can charge retailers for swiping debit cards to 21 cents per transaction.
The decision represents an increase from a 12-cent cap proposed in December.
Here's what local firms had to say:
--- RUTTER'S FARM STORES:
CEO Scott Hartman said the actual cost to process a debit transaction is around 4 cents -- much lower than the government's 21-cent cap.
"I know a lot of companies around here that would like to make five times what their cost is," he said.
Next to labor and rent, interchange fees are Rutter's third largest expenditure, totaling $5 million last year, Hartman said.
So far this year, he said, interchange costs are up by $500,000.
"If we can begin to allow merchants to negotiate and make some banks provide lower fees, then banks are just like every other business in the country," he said. "We're not trying to beat up banks. We're trying to get them to play under the same rules."
Though he'd like to see the cap lowered, the regulation, in general, he said, is a good thing, and could trickle down to consumers in the form of lower prices.
"Right now, every time costs go up, a business passes them some way back through to consumers," he said. "When they go down, they should get the same direct benefit, because businesses compete."
--- FULTON FINANCIAL CORP.:
Capping interchange fees means banks must recover lost revenue, said Laura Wakeley, spokeswoman for Fulton Financial Corp., which operates more than 100 Fulton Bank branches in Pennsylvania and Virginia.
"Can there be free checking accounts anymore?" Wakeley asked. "Are there going to be rewards programs? All of these things cost money."
Banks with less than $10 billion in assets are exempt from the interchange fee regulation, though some argue that they could be forced into competition with larger financial institutions.
"If banks over $10 billion are capped at a certain rate, banks under $10 billion will also have to charge that rate to be able to get the business from retailers," Wakeley said. "Retailers are going to gravitate toward the lower cost option to get those transactions processed. Why would they choose the same service for more money?"
--- PLANET X COMICS:
Kimberly Fling said she's in favor of the cap.
"We're a brand new business," said Fling, owner of Planet X Comics in York Township. "The less fees we have, the more growth we're going to see."