It is nice to see an example of how the regulation of banks can benefit consumers. Word has come out that Home Depot customers are seeing lower prices after regulators capped debit card swipe fees.
As a result of new federal regulations related to the Durbin Amendment to the Dodd-Frank Act, Home Depot has been able to lower its prices on more than 3,000 products in their stores. You see, retailers had been charged large fees for debit card use, and would pass these costs onto consumers.
"The money saved [by] Durbin goes into the pool of savings, lowers our overall operating costs and allows us to reinvest in the business to lower prices," according to Dwaine Kimmet, the retailer's treasurer and vice president of credit. Kimmet says that interchange fees represent Home Depot's third-highest operating cost, after real estate costs for its stores and wages for its employees.
Home Depot has long been a critic of the prices retailers pay to accept debit and credit cards. It is now showing that if those fees are reduced through regulatation, the retailer can pass the savings on to consumers.
In fighting regulation, banks warned that consumers would ultimately end up paying more for banking services without paying less at retailers.
In response to the debit card caps, banks are increasing credit card fees it charges retailers to make up for the fee loss. So, Home Depot is actively looking for alternatives to the traditional credit card system, in a bid to pay less for accepting Visa and Mastercard payments. The retailer is accepting PayPal’s new in-store technology at its registers.
Source: American Banker