Home Depot: Prices Lower Since Transaction Fee Battle

NEW YORK ( Credit.com) -- Consumers who head to one of the nation's top home improvement retailers in the near future may notice the prices are lower.

After Home Depot ( HD) fought and won a major battle with large financial institutions over the fees it was charged to accept debit and credit card transactions -- known in the payment industry as swipe or interchange fees -- it saw its operating costs take a tumble, according to a report from American Banker. The victory over major banks came late last year when the Federal Reserve Board announced a rule that limited the amount banks could charge for a debit card transaction fee to just 24 cents per swipe, down significantly from the total that came from the fees that averaged approximately 3% of a total transaction's value.
Home Depot prices may be lower since the so-called Durbin Amendment, but the retailer is cautious in noting that these price drops were not the direct result of the regulation.

Since the rules from the Fed took taking effect last October, Home Depot has lowered prices for some 3,000 products, a store executive says. He was also cautious in noting that these price drops were not the direct result of the regulation, though, but rather the overall savings on operating costs the company has enjoyed since.

"The money saved by the Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protect Act of 2010 goes into the pool of savings, lowers our overall operating costs and allows us to reinvest in the business to lower prices," says Dwaine Kimmet, Home Depot's treasurer and vice president of credit, told the site. "We have absolutely lowered prices, but what I can't do is draw that direct correlation to Durbin."

The Durbin Amendment is believed to have saved retailers about $5 billion on debit interchange fees they faced annually, the report said. To make up for that massive stream of lost revenue, though, many financial institutions have passed more costs onto consumers in the form of account management fees.

Some institutions are also exempting certain consumers from these higher maintenance fees if they meet certain requirements every month, such as depositing a certain amount. But at the same time, many consumers may also want to head to smaller institutions such as credit unions, which are exempt from the regulations and therefore do not have to charge these fees to recoup losses.
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