The Federal Reserve's proposed rule on interchange fees won't help merchants enough and will still help big banks keep high profits at their expense, the Merchants Payment Coalition wrote Congress.
The coalition, which says it represents 2.7 million stores, wrote that swipe fees should be eliminated and doing so would help consumers, merchants and the economy.
"The Fed did not reduce swipe fees enough in its rules and the huge banks to be regulated will remain immensely profitable even without any of the swollen profits of centrally fixed fee pricing,'' the coalition wrote.
In the rules that the Fed sent out for comment last Thursday, the central bank proposed capping debit interchange at no more than 12 cents per transaction. This would be a flat fee whereas debit interchange is currently calculated as a percentage of a transaction, often around 1%.
The coalition refuted the claim made by financial institutions that the higher fees would result in higher consumer fees and contended that swipe fees are "just the latest excuse for banks to raise consumer fees.''
In addition, the coalition said retail industry profit margins average between 1% and 3% while the big banks have substantially higher profit margins.