Mr. Swanick got one thing right in his piece "So Where Are Those Post-Durbin Price Reductions for Consumers?" (Oct. 10): "No one likes price increases, especially when they appear suddenly and without apparent justification." Hidden, unjustified price increases are what the merchant community and our customers have been facing for years with the way big banks and card networks collude to set both credit and debit card interchange swipe fee prices.

Swanick's piece also ignores what Bank of America has recently admitted: it was going to impose these new fees more than a year ago. That had nothing to do with any new law passed by Congress, it was just the inexorable march of the biggest banks finding new ways to exact more fees from consumers. Why didn't Bank of America do it then? Well, Bank of America said it was concerned about how to communicate the new fee to consumers. Everyone knows that is simply code. What it means is that Bank of America didn't have anything good to blame for the new fee so it waited until it did. Now, it blames debit reform and Swanick buys the explanation without question. But centrally fixed fees that have exploded over the past decades were illegitimate to begin with and banks around the world (virtually all of which charge far lower or no interchange on debit) have shown that consumer fees don't increase based on interchange revenue. Consumer fees (unlike interchange) exist in a competitive market and go up and down on the basis of the dynamics of that market, period.

Even U.S. financial institutions show the Bank of America excuse to be a smokescreen. There are plenty of institutions that are not charging new fees and are reaping the benefits of competition in the marketplace from customers who would rather take their business elsewhere than pay the fees. For example, the country's largest credit union, which is not exempt from the debit reforms and is not charging new fees, the Navy Federal Credit Union, reported that new account openings following Bank of America's fee announcement were 23 percent higher than average. That means Bank of America will soon learn whether the consumer market will allow the fees or not — and how that plays out will have nothing to do with debit reform.

As for merchant costs, the fact that Swanick has no evidence of savings a couple of weeks after reform started is not surprising — both because of the short time elapsed and Swanick's obvious lack of looking. In fact, Reuters has already reported on new discounts and rewards offered by merchants. Swanick may wish it weren't so, but retail is the most price-competitive part of the U.S. economy and that means if merchant costs go down, prices go down. That is occurring and will continue (especially once merchants actually find out how much they're saving — something not yet possible under the non-transparent swipe fee system).

The bottom line is that centrally fixed fees are bad economically and any effort to limit them is helpful. Swanick may buy the Bank of America party line, but readers ought to study the facts before they make the same mistake.

Lyle Beckwith
Senior vice president of government relations
National Association of Convenience Stores