The Bank Policy Institute (BPI) launched a new advertising campaign today named “Chain Store Charity.” The campaign aims to highlight how large retail chain stores are benefiting from Regulation II, which limits the fees banks can charge for debit card transactions. The initiative is being targeted at Washington, D.C., and selected national media markets, and includes an educational website detailing the negative impacts of price fixing on debit card transactions.

“In 2011, giant chain stores like Walmart successfully lobbied policymakers to lower debit card transaction fees by promising to pass the savings on to customers. However, these mega-retailers failed to uphold their promise, and 98 percent of surveyed merchants either maintained or increased existing prices,” stated BPI President and CEO Greg Baer. “Instead of saving consumers money, the cap under Regulation II increased mega-retailer profits, reduced access to free checking accounts, undermined investments in new fraud prevention technology and threatened the viability of struggling community banks. Our ad campaign unmasks mega-retailers’ false promises to help consumers and demonstrates how Regulation II is bad policy that amounts to nothing more than a handout to giant chain stores.”

According to recent Federal Reserve data, banks facilitated $4.2 trillion in debit transactions in 2021. Despite gaining substantial benefits from debit card services such as higher sales and enhanced security, large chain stores aim to further reduce their costs for these services.

Following the enactment of Regulation II in 2011:

- A study by the Federal Reserve Bank of Richmond and Javelin Strategy and Research found that 75 percent of merchants retained their prices while 23 percent increased them; only 2 percent decreased prices.

- The Electronic Payments Coalition estimated that merchants gained $42 billion in profits over five years.

- Access to free checking accounts dropped from being offered by 60 percent of banks to less than 20 percent.

- Banks subject to the regulation doubled their checking account fees from less than $4 to $7.

- Minimum balance requirements for interest-bearing checking accounts rose by 55 percent.

- Small community banks exempt from the regulation saw a 16 percent decline in revenue for debit transactions routed over single-message networks.

The campaign's website provides information on Regulation II’s implications, details on how debit cards function, and encourages visitors to send sympathy cards to retail industry associations expressing discontent with having to pay for debit card processing.

The Bank Policy Institute describes itself as a nonpartisan public policy group representing universal banks, regional banks, and major foreign banks operating in the United States. It conducts academic research on regulatory issues and represents the financial services industry on cybersecurity and fraud matters.

Austin Anton can be contacted at austin.anton@bpi.com for further information.