Inside Washington Retail: Merchants urge CFPB to address bank-driven cash-back fees in small towns
The Merchants Payments Coalition (MPC) is urging the Consumer Financial Protection Bureau (CFPB) to address the root causes of cash-back fees in small towns, attributing them to high swipe fees set by banks and the lack of banking services in these areas. A recent CFPB report revealed that while most merchants offer cash-back at no charge, some charge fees due to the exorbitant costs imposed by credit card companies and unregulated small banks. These fees, which can reach $3 for every $100 given as cash back, contrast sharply with the modest 50 cents to $1 fees merchants typically charge customers. The MPC argues that the real issue lies in the banking and credit card industries, whose rising swipe fees have doubled over the past decade, significantly increasing costs for consumers.
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The Merchants Payments Coalition turned the study into an anti-banking message. “The CFPB’s report shows most merchants provide cash back to customers at no charge, and that means they are taking losses in order to provide this valuable service. Those who are charging a fee do so because they must pay exorbitant fees to credit card companies and banks,” said Doug Kantor, a member of the coalition’s executive committee and general counsel at the National Association of Convenience Stores. Added Kantor for the coalition: “We should always be clear that the source of the problem with consumer fees on any card transaction is the banking and credit card industry.”
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Credit Unions Today: Merchants Group Fires Back at CFPB; Says Real Fault for Fees Charged for Getting Cash Back at Stores Lies With Financial Institutions
“The CFPB’s report shows most merchants provide cash back to customers at no charge, and that means they are taking losses in order to provide this valuable service,” MPC Executive Committee member and National Association of Convenience Stores General Counsel Doug Kantor said in a statement. “Those who are charging a fee do so because they must pay exorbitant fees to credit card companies and banks. Most debit cards in small towns across America that have been abandoned by banks are not subject to federal regulations and charge merchants exorbitant swipe fees – much like credit cards that have no regulation at all. We should always be clear that the source of the problem with consumer fees on any card transaction is the banking and credit card industry."
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The cause of the acrimony isn’t hard to perceive. U.S. merchants paid more than $100 billion in interchange fees in 2023, according to the Merchants Payments Coalition, which lobbies on behalf of merchants on interchange and related matters.
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Digital Transactions: Blame High Swipe Fees for Stores’ Cash-Back Charges, a Merchant Group Says
The average merchant fee for cash-back is less than the surcharges for out-of-network ATM withdrawals, and the Merchants Payments Coalition counters that most retailers don’t charge a cash-back fee and that those that do charge a fee do so to help offset the cost of swipe fees.
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Gifts and Decorative Accessories: High Fees for Cash-Back Transactions? Blame the Banks, Not the Store, MPC Says
A Consumer Financial Protection Bureau report recently released touched on how American consumers are paying “tens of millions of dollars” to access their own money through cash back transactions. But the Merchants Payments Coalition says those fees are the fault of the banks who set high “swipe” fees while also failing to provide services in small towns. The report, which was released this week, said “Americans are paying tens of millions of dollars in fees to access their own money when getting ‘cash back’” when using a debit card or prepaid card. “Swipe fees go up with every extra dollar in a transaction, so retailers have to pay higher fees if a customer wants cash back,” said MPC Executive Committee member and National Association of Convenience Stores General Counsel Doug Kantor said.
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CNBC: Dollar General, Dollar Tree and Kroger customers pay over $90 million a year in cash-back fees, federal agency finds
The “vast majority” of retailers don’t charge for cash back, and therefore take a financial loss to offer this service to customers for free, said Doug Kantor, general counsel at the National Association of Convenience Stores and a member of the Merchants Payments Coalition Executive Committee. “Banks have abandoned many of these communities and they’re gouging retailers just for taking people’s cards or giving people cash,” he said.
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Digital Transactions: The CFPB Reviews Cash Back at the Point of Sale Amid Concerns of Reduced Access to Cash
“The source of these issues is the banking industry charging retailers excessive fees to accept debit cards,” Doug Kantor, general counsel of the National Association of Convenience Stores, tells Digital Transactions News. The CFPB points out that banks have abandoned these towns, Kantor says. Retailers are serving these consumers and “getting hit with fees. That’s a real cost to those retailers,” he says. The focus should be on banks creating the problem rather than the retailers, who are caught in the middle, says Kantor, an executive committee member of the Merchants Payment Coalition.
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Center Square: With growing consumer debt, credit card companies make billions more off swipe fees
While many banks oppose the proposed legislation, a recent survey by the Merchants Payments Coalition found that a majority of Americans support the Credit Card Competition Act. "According to the survey, 55% of likely voters in this fall’s general election support the CCCA while only 7% oppose it, and 38% are unsure," a news release accompanying the survey says. "Supporters outnumber opponents by nearly 50 percentage points."
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Digital Transactions: Lenders Bring Suit Against Illinois’s Newly Enacted Interchange Law
“The state of Illinois is likely to prevail [in this case] because allegations about how hard it will be to implement the law and that it runs afoul of federal and state laws are mistaken,” says Doug Kantor, an MPC executive committee member and general counsel for the National Association of Convenience Stores. “Banks are upset with the law because it sends money in the other direction [to merchants].”
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