Issuer Study Says Retailers Keep Interchange Savings
On the same day a merchant group's study claimed retailers pass on interchange savings to consumers, debit card issuers released their own study that claims merchants do no such thing.
“As part of their lobbying tactics, giant retailers promised to lower prices for their customers if Congress passed the Durbin amendment. Two years after implementation, retailers have taken home an $8 billion annual windfall while their customers still aren’t seeing a discount for using debit,” said Sam Fabens, spokesman for the Electronic Payments Coalition, which sponsored the study.
To collect the data for the field research, 32 shopping trips were performed at 16 stores nationwide. Identical products were purchased at each store and compared: one shopping trip in September 2011 before implementation of the Durbin amendment; one in September 2012 – a year after the implementation of the Durbin amendment; and one in September 2013 – two years after the implementation of the Durbin amendment.
This differs sharply from the merchant study, also released on Tuesday, which said merchants use their interchange savings to lower prices by applying a previous study of merchant behavior to the known amount of interchange savings released by the Federal Reserve.
Specific findings included that the price of milk at a Walgreens in San Francisco has increased by 30 cents in the past year, and the cost of peanut butter at a 7-Eleven in Boston went up by 20 cents.
The research shoppers found a hammer at a Home Depot in Portland, Maine, had been $4.98 since before the implementation of the Durbin amendment in 2011 and that a Slurpee from a 7-Eleven in Washington, D.C., has cost $1.49 each year since 2011.
Finally, the cost of macaroni and cheese from a Wal-Mart in Washington, D.C., has been $1.38 every year since 2011 while the cost of paint from a Home Depot in Atlanta has stayed the same price since last year, the EPC study found.