WASHINGTON - As retailers across the country prepare for the implementation of the Federal Reserve's swipe fee rules this summer, many are already emboldened by the reforms and have begun offering significant discounts for those customers paying with cash. Once the reforms go into effect on July 21, merchants will be able to offer similar incentives to customers who pay with debit cards.

The current boom in cash discounts indicates what??s to come once the provisions of the Durbin amendment take effect. Because merchants operate in a price-competitive retail environment, any decrease in costs will lead to a decrease in consumer prices.

As Tom Robinson, NACS vice chairman of government relations, testified to the House Judiciary Committee: "There is not a businessman that doesn't attempt to keep the margin. But the competition always drives it back out. And when you have a competitive market - and we definitely have a competitive market, unlike some others - those benefits will go to the consumer."

"Lower merchant costs translate to lower customer prices, it's as simple as that," said Lyle Beckwith, NACS senior vice president of government relations. "Unlike the big Visa banks, which operate in a non-competitive environment where price-fixing is the norm, merchants base their business decisions on the price-competitive retail environment where price is king."

A gasoline price war taking place among petroleum retailers in Savannah, GA demonstrates the level of competition in the industry and the ways in which retailers have begun innovating to provide discounts for their cash-carrying customers. In a race to gain market share and see lower swipe fees, local gas stations are competing with each other to offer the most appealing customer discounts. Local consumers, always courted by retailers, now find themselves with the new perk of a 10-cent discount per gallon of gas.

Because of the ease of differentiated pricing for gasoline, gas stations have been at the forefront of new customer discounts-but they are not the only ones who have been motivated by the Durbin amendment to offer discounts for cash.

Noodles on 1, a new restaurant in the District of Columbia, offers a five percent discount for diners who pay with cash. Chatree "Charles" Kiatrungrit, who owns the noodle joint, says that five percent is the amount he would otherwise be giving to the credit card companies. Instead of passing those swipe fees along to the big banks and credit card giants, Kiatrungrit opts to pass those savings along to his customers.

The Federal Reserve rule won't be finalized until April 22, but retailers are already taking the initiative to offer customer discounts. Such competitive behavior is indicative of future savings that consumers will see once the rules are implemented.

U.S. PIRG submitted testimony to Congress and comments to the Federal Reserve in support of swipe fee reform and found that "Reductions in swipe fees should result in substantially lower prices for all consumers."

Unfortunately, the biggest banks and credit card companies are furiously lobbying to stop consumers from getting discounts.