Debit Card Fee Hike Took Many By Surprise; Consumers Are Our Allies, So Let’s Fight For Change

Oct. 5, 2011
The vending industry always takes the hit when its needs conflict with better financed interests.
Shortly after the Federal Reserve Board approved the Durbin amendment this summer, vending industry observers said it would not affect cashless vending since the 21-cent cap on transaction fees was clearly higher than what vending operators were paying for cashless transactions. Whats happened since then is that many big banks have decided to raise the fees on small debit transactions to make up for the losses they will incur on big ticket transactions. Some are also adding fees on consumers debit card accounts.The decision took many by surprise.Cashless vending system providers are scrambling to get banks to limit the fees they have announced.The National Automatic Merchandising Association (NAMA) is contacting banks and speaking with lawmakers to determine what, if any, regulatory relief is possible.There arent any immediate solutions in sight.This is the last thing our industry needs at a time when cashless is making inroads.In recent years, financial institutions indicated an interest in developing the small transaction market, including vending. But they have not hesitated to throw the small ticket market under the bus when it came time to find ways to recover the losses they expect on high ticket transactions due to the Durbin rule.The Wall Street Journal noted back in June that the Durbin amendment is nothing more than a scheme to move cash from one industry (banks issuing credit cards) to another industry (big retailers that pay the lions share of debit transaction fees). The Journal noted the bankers would simply offset their losses, estimated at $6.6 billion per year, elsewhere.Senator Durbin cant get enough attention for the mess his amendment has created for U.S. consumers. Yesterday, he urged consumers to vote with your feet and stop doing business with Bank of America, one of the institutions that reportedly raised fees for debit accounts.President Obama, for his part, didnt miss the opportunity to chime in while on ABC News, blaming the banks for the mess that his administration has created.While industry groups such as NAMA and others scramble for solutions, the winners in this debacle the big retailers who promised to pass along their savings to consumers (dont hold your breath) arent finished with us and our customers.Flush with their recent victory, the Retail Industry Leaders Association says it now plans to lobby for more favorable credit (as opposed to debit) interchange fees, as reported in todays VendingMarketWatch.The well heeled special interests know when they have a government primed to play ball with them.The vending industry always takes the hit when its needs conflict with better financed interests.Its one of the costs of being in the vending business. And a reason that the industry needs a strong trade association.Our industry isnt the only party feeling the pinch. Consumers who use debit cards and thats a lot of consumers want change as well.Operators should check the NAMA Website,, for daily updates.