Consumers Seeing Red, Not Green, at the Register during Holiday Shopping Season
WASHINGTON,
Dec. 8, 2011 /PRNewswire/ -- Consumers are getting a lump of coal this year from giant retailers. According to new field research released today, at least
76 percent of retailers included in the research have not passed promised savings to consumers, despite already receiving
$825 million in windfall profits from the
Durbin amendment. Congress justified the Durbin amendment, which established price controls on the cost retailers pay to accept debit cards, in part because of proclamations by retailers that consumers would benefit in the form of lower prices.
But the truth is:
- Sixteen of 21 retailers visited across the country either raised prices or kept them the same before and after the October 1 implementation of the Durbin amendment, which slashed the price that retailers pay to accept debit cards in half.
- Overall, customers paid on average 1.7 percent more after implementation.
"Merchants' empty promises to pass savings on debit card purchases are coming to light," said Trish Wexler, spokeswoman for the Electronic Payments Coalition. "More than two months after the Federal Reserve's rule implementation, customers are actually paying more for the same products – even though retailers are already taking home millions in additional profits. Something is very wrong with this picture."
These findings come just two weeks after the National Retail Federation, National Association of Convenience Stores, and other merchant organizations filed a lawsuit against the Federal Reserve, claiming that they should be paying even less in debit card interchange.
To collect the data for the field research, 84 shopping trips were performed at 21 stores across the country. A consistent list of products was purchased during four separate shopping trips at each store: one in the final week of September, before the October 1 implementation deadline, and three additional times following implementation.
After the Federal Reserve's rule implementation, shoppers paid on average:
$1.07 (or 3 percent) more for the same items at Wal-Mart in Boston, Massachusetts
$0.73 (or 2.9 percent) more for the same items at Walgreens in Little Rock, Arkansas
The same price for the same items at Home Depot in Atlanta, Georgia
And these higher prices for customers come as merchants are already seeing millions in additional savings. Heartland Payment Systems, one of the largest merchant payment processing companies, reported that their merchants have already seen
$33 million (and counting) in savings. Industry-wide, this translates to
$825 million saved since
October 1 – just a fraction of the
$8 billion merchants expect to take home.
About the Electronic Payments Coalition
The Electronic Payments Coalition (EPC) includes credit unions, banks, and payment card networks that move electronic payments quickly and securely between millions of merchants and millions of consumers across the globe. EPC's goal is to protect the value, innovation, convenience and competition in today's growing electronic payments system. EPC educates policymakers, consumers and the media on the system's role in economic growth, and the importance of protecting consumer choice and stability for the continued growth of global commerce.
SOURCE Electronic Payments Coalition
