The Consumer Financial Protection Bureau (CFPB) has issued its final Personal Financial Data Rights Rule, aimed at simplifying the sharing of consumers’ financial data between banks and other financial services providers.
The rule requires banks to share data related to various financial products, including bank accounts, credit cards, prepaid cards, mobile wallets, and payment applications, without imposing fees on consumers for data sharing. By facilitating broader access to financial information, the rule is intended to make it easier for consumers to switch banks and access alternative payment solutions.
The National Retail Federation (NRF) welcomed the rule, emphasizing its potential to offer merchants a lower-cost alternative to traditional credit card transactions, potentially reducing “swipe” fees for retailers.
“Retailers need to pay close attention to developments with open banking and the potential it offers as an alternative to the costly way payments are currently processed,” NRF Chief Administrative Officer and General Counsel Stephanie Martz said. “Retailers pay the card industry tens of billions of dollars to process credit and debit card transactions, driving up prices for American families on every purchase. Open banking could cut out these middlemen and create competition that would benefit small businesses and consumers alike. These new rules are an important step toward making that happen.”
Potential Reduction in Payment Processing Fees
Currently, swipe fees—also known as interchange fees—charged by credit card networks like Visa and Mastercard average between 2% and 4% of a transaction’s value, a significant operational cost for retailers. The NRF reports that these fees are second only to labor costs for many businesses, amounting to $170 billion in 2022, according to the Nilson Report. According to the NRF, swipe fees contribute to higher prices, costing the average American family an estimated $1,100 each year.
The new open banking regulations may enable merchants to bypass credit card networks, making direct consumer-to-merchant bank transfers possible. According to Stephanie Martz, NRF Chief Administrative Officer and General Counsel, “Open banking could cut out these middlemen and create competition that would benefit small businesses and consumers alike. These new rules are an important step toward making that happen.”
Implications for Jewelers and Retailers
For jewelers, who often operate on tight margins, lowering or eliminating swipe fees could improve profitability. Lower transaction fees could help jewelers retain more revenue on each sale, particularly for high-value purchases where swipe fees are proportionally larger. With the possibility of integrating “pay by bank” or other fintech services directly, retailers in the jewelry industry could also offer customers more flexibility in payment options, which may appeal to an increasingly digital-savvy consumer base.
