The National Restaurant Association and the Restaurant Law Center (RLC) have submitted comments to the Federal Reserve System Board of Governors’ “Debit Card Interchange Fees and Routing” Notice of Proposed Rulemaking (NPRM). The organizations have voiced their support for the Board's duty to review debit card interchange rates, while also urging it to lower the rate below its target and eliminate additional fees. They argue that this would result in a fairer rate for debit card issuers, restaurants of all sizes, and diners.

The organizations suggested several changes in their comments. They asked the Board to consider how an updated interchange fee cap would impact small-ticket merchants like restaurant operators. They also proposed decreasing the base component of the interchange fee cap to 6 cents from the proposed 14.4 cents, eliminating the ad valorem component of the interchange fee cap, reducing the fraud-prevention adjustment from 1 cent, and establishing audit and enforcement plans.

These changes are necessary because under the Durbin Amendment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Fed Board of Governors is required to review debit card interchange fees biennially. This is done to evaluate if these fees remain reasonable and proportionate to issuer costs.

Data from Circana/CREST reveals that among restaurant customers who paid with either a credit/debit card or cash in 2023, 70% used a credit or debit card. This was up from 53% in 2018.

“Since the pandemic, restaurant operators have seen a large increase in payments made via credit and debit cards in comparison to cash,” said Brennan Duckett, director of Technology and Innovation Policy for the National Restaurant Association. “The more they swipe cards, the more it costs operators to run their restaurants."

The comments also called for lowering or eliminating altogether the ad valorem component of the interchange fee cap due to findings that between 2011-2021, financial institutions shifted two-thirds of all fraud losses onto merchants and consumers.

Sean Kennedy, executive vice president of Public Affairs for the National Restaurant Association, added that the weight of credit card fees gets heavier each year due to lack of regulation. He said, “The Fed has the responsibility to ensure that debit interchange fees remain reasonable. This is their chance to provide a small bit of relief from these costs for restaurant operators and consumers.”