NRF: Retailers share debt swipe fee savings
Washington, D.C. – The National Retail Federation welcomed a new study that shows retailers have passed along the majority of the savings from debit card swipe fee reform to their customers, and that the resulting increase in consumer spending has boosted job creation across the country.
But the study also shows that benefits for consumers and the economy could have been much larger if the Federal Reserve had set its cap on debit swipe fees lower as directed by Congress.
“This is clear evidence that retailers have seen significant savings from swipe fee reform and that they’re sharing that savings with their customers in a variety of ways,” NRF senior VP and general counsel Mallory Duncan said. “That’s a huge improvement over where we were before reform, and both consumers and the economy are better off. But the savings could have been far greater for retailers and consumers alike if the Federal Reserve had capped debit swipe fees at the level intended by Congress. The fight to bring swipe fees under control is far from over.”
Retailers saved $8.5 billion in 2012 thanks to a cap on debit card swipe fees that took effect on October 1, 2011, and passed along $5.87 billion of that savings to customers, according to a report titled “The Costs and Benefits of Half a Loaf: The Economic Benefits of Recent Regulation of Debit Card Interchange Fees.” The savings for customers led to increased consumer spending that increased the demand for goods and services while retailers put their share into hiring additional workers or business spending that created jobs. Together, the boost in economic activity supported the creation of 37,500 new jobs in both retail and other industries.
The savings could have been larger, however, if the Federal Reserve had set the cap at its original proposal of no more than 12 cents per transaction rather than yielding to banking industry pressure and setting it at about 21 cents instead, the study said. The savings would have totaled $12.5 billion and 55,000 jobs would have been created, according to the study.
The study was written by economist Robert Shapiro, a former advisor to President Bill Clinton. It was prepared for the Merchants Payments Coalition, which was formed by NRF and other trade associations in 2005 to fight rising swipe fees.
Study: Consumers prefer prepaid, physical cards
Lewisville, Texas – Consumers prefer prepaid cards that can be used anywhere to gift cards from specific retailers and physical cards to digital cards.
According to the new “People Prefer Prepaid Rewards” study from Parago, more than half of shoppers prefer prepaid cards over gift cards from Amazon, iTunes, Target, Walmart, Home Depot and more. In addition, two out of three shoppers prefer physical cards over digital cards.
“We’re not surprised to confirm that consumers love prepaid card rewards; these cards are like cash and people enjoy the flexibility and convenience,” said Theresa Wabler, global director of marketing at Parago. “What was more unexpected was that, in an era of digital shopping, consumers still prefer physical over digital rewards. This report gives a clear directive to consumer-facing businesses: your customers are more likely to buy from you when rewarded with prepaid cards, sometimes even in values lower than other incentives.”
The shopper survey was completed in September 2013 via independent online delivery. More than 1,400 consumers (representative of the U.S. population by education, income and sex) responded to a 23-question survey that explored which rewards would affect their purchasing behaviors.
Teamsters reject Wegmans contract
Rochester, N.Y. – Teamsters Local 118 members on Monday overwhelmingly rejected a contract offer from Wegmans Food Markets, Inc. that would eliminate the pensions of more than 900 Rochester employees and not provide health care for their spouses. Local 118 will immediately request the participation of the Federal Mediation and Conciliation Service to settle the outstanding contract.
"Our members flatly said no to an offer that would immediately cut their compensation package, eradicate our pension and leave our spouses’ health care in jeopardy," said Kevin McIntosh, Teamsters Local 118 business agent. By rejecting the contract, Teamsters Local 118 also authorized strike action.
Wegmans reports that it is offering a pay increase of more than 18%, although the contract would eliminate the $4.82 members have voluntarily diverted from wages to their pension fund. The company also refused to agree to contract language that would protect spouses under the contract. Wegmans faces unfair labor practice charges for violations of federal labor law that protect workers’ rights and prevent the company from unilaterally changing working conditions – in this case after workers protested the company’s proposal to eliminate their pension benefits. The charges will be investigated by Region 3 of the National Labor Relations Board in Buffalo, N.Y.
Teamsters Local 118, which represents more than 900 Wegmans warehouse workers, drivers and other skilled trades, has been in negotiations with Wegmans since March.