MARY LOUISE KELLY, host:

The law that overhauls financial regulations, which the president is signing today, ushers in sweeping changes for everything from Wall Street investment firms to Main Street banks. The bill also gives a break to retailers, who say theyve suffered years of high fees on debit card transactions.

NPR's Tamara Keith reports.

Unidentified Man: Roast beef.

Mr. DAVID GERHARDT (Cafe Phillips): And would what you like with that?

TAMARA KEITH: It's the lunchtime rush at Caf� Phillips in Washington, D.C. And when it comes time to pay for those roast beef sandwiches, a lot of customers pull out plastic.

David Gerhardt mans the register with no small amount of flair.

Mr. GERHARDT: You have a nice day.

I generally much prefer when people have cash, as I'd much work with cash than I am with the card.

KEITH: The owner likes cash too, but for a different reason. When people pay with plastic, about two cents on the dollar gets eaten up with fees. The money goes to the banks that issue the cards and to the payment networks, Visa and Mastercard. It may not sound like much, but Sonja Hubbard says it adds up fast. She's the CEO of E-Z Mart stores, a chain of 300 convenience stores in the South.

Ms. SONJA HUBBARD (CEO, E-Z Mart): Within our company, we average almost $10 million a year, so.

KEITH: On fees?

Ms. HUBBARD: Just on fees. Yes.

KEITH: She says its the second-largest expense, right behind payroll.

Ms. HUBBARD: More expensive than the rent.

KEITH: On small transactions, like a cup of coffee or a newspaper, Hubbard says those fees mean E-Z Mart actually loses money. She says one day a college kid came into one of her stores three times.

Ms. HUBBARD: The highest purchase was $2.35 and then the other two were below that. And so I thought, it's a frequent customer who you have to value, was there three times that day, and I lost money on every transaction.

KEITH: Hubbard is thrilled about the amendments in the financial regulation bill that aims to rein in fees on debit card transactions. It directs the Federal Reserve to set a new fee structure that is reasonable and proportional.

Everyone agrees that means merchants like Caf� Phillips and the E-Z Mart stores will be paying less in the future. But there's a whole lot of disagreement about whether consumers will be better off in the end.

Mr. SCOTT TALBOTT (Senior vice president, Financial Services Roundtable): This is a cost shift from merchants to the consumers, of their operating costs, down to the consumers.

KEITH: Scott Talbott is senior vice president of the Financial Services Roundtable, which represents Visa, Mastercard and all the biggest banks.

He doesn't think retailers are going to pass all of their savings on to customers and he doesn't think banks will just eat the losses. These transaction fees have become a significant source of revenue.

Mr. TALBOTT: You could start seeing an annual fee for a debit card. You could see like they do in Canada a fee for a certain number of debit card transactions, or a loss of rewards or other type programs.

KEITH: Bank of America hasn't decided what it will do. But on a recent earnings call, BofA executives estimated they could lose as much as $2.3 billion of revenue a year.

Mallory Duncan, with the National Retail Federation, says he's convinced the change will help consumers, not hurt them. His group has been pushing to get these fees regulated for years.

Mr. MALLORY DUNCAN (Senior vice president and general counsel, National Retail Federation): All of these swipe fees, that go with debit cards, are hidden from consumers. And one of the benefits of this legislation is that it pushes things into the open.

And if the banks try to make it up someplace else, consumers have a choice about whether they want to bank with a bank that's trying to gouge them.

KEITH: Banks, of course, wouldn't call it gouging. The bill also allows merchants to set a minimum dollar amount for accepting a credit card say $10. And it allows them to offer discounts to people who forgo plastic and pay with cash or check. So, maybe more people will start carrying cash again for small purchases.

Tamara Keith, NPR News, Washington.

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