Dodd-Frank

When Costs Considered, Support for Government Caps on 'Swipe Fees' Wane

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The new Dodd-Frank financial regulation law mandates the Federal Reserve cap fees business charge retailers when customers use a credit or debit card. These fees are called 'swiping fees'.

According to a recent IBOPE Zogby poll, when respondents were asked whether or not they support "caps on the 'swiping fees'", overwhelmingly 66% of respondents supported this cap. Moreover, when asked if respondents supported increased regulations on bank-fees, 60% also agreed. However, these questions did not take into account the unforeseen consequences of such regulations. Laws such as these do not operate in a vacuum and thus influence other actions taken by banks, retailers, and customers. The subsequent Zogby questions reveal our preferences change when costs are considered.

When respondents were then asked if they would support capping 'swiping fees "even if, as a consequence, banks limit the amount per transaction (For example, banks could limit each transaction to $50)" then support for these caps plummeted to 34%. Moreover, when prompted what would be the likely consequences of capping banking fees, the majority 56% of respondents answered an "increase in bank-imposed restrictions on the services" compared to only 22% who thought it would lead to "more affordable banking services with no significant changes".

This survey reveals how consumer preference for regulation changes when the costs of such regulations are considered. In the case of bank swiping fees, it is not clear whether or not Americans believe the benefits outweigh the costs.

A 'swiping fee' is a fee that a business pays to a bank whenever a customer uses a credit or a debit card. Regulators are currently considering capping the 'swiping fees'. Would you support or oppose caps on the 'swiping fees'?

Response%
Strongly + somewhat support66%
Strongly + somewhat oppose23%
Not sure/refuse11%

Do you support or oppose increased regulations on bank-fees?

Response%
Strongly + somewhat support60%
Strongly + somewhat oppose31%
Not sure/refuse10%

Would you support or oppose caps on the 'swiping fees' even if, as a consequence, banks limit amount per transaction? (For example, banks could limit each transaction to $50).

Response%
Strongly + somewhat support34%
Strongly + somewhat oppose48%
Not sure/refuse18%

What do you think the most likely consequences would be of capping the fees of banking services?

Response%
Increase in bank-imposed restrictions on the services56%
More affordable banking services with no significant changes22%
Not sure/refused19%
Other2%

Totals may not add up to 100% due to rounding.

Read the full results from the IBOPE Zogby Poll here.