Reforming swipe fees is critical for the economy and job creation

Reforming swipe fees is critical to creating more jobs and getting our economy moving again. The 1,500 companies who signed this letter to Chairman Bernanke is a strong indication of the importance of the Federal Reserve’s actions to these businesses and the impact interchange swipe fees have on their businesses and communities.

The current system of unchecked central price-fixing by the card companies has led to an inefficient market with complex and unpredictable rates. The inability to negotiate rates and terms of card acceptance is unlike any other business relationship merchants have – some would not say it’s not a relationship at all when one side dictates all the rules.

With cutting-edge technology and an increasing number of transactions, one would expect the cost of a transaction to decrease due to efficiency.  However, that has not been the case.  Additionally, there is no payment guarantee when a customer swipes a debit card in one of our grocery stores. The bank card network can reverse the transaction due to a processing errors or fraud so there are times when merchants never get paid for the products they sell.

The card companies have set interchange fees for more than a decade, and have increased these fees with complete disregard to the impact on merchants and consumers. Grocery stores are a low-margin competitive industry. We compete for customers on price and service, and we are confident our customers will benefit when these reforms go into effect. We look forward to the implementation of the debit interchange fee and routing reforms this summer that will provide much-needed relief to Main Street businesses that in the end will benefit our customers as well.

Leslie G. Sarasin is the president and chief executive officer of the Food Marketing Institute.