The Fed’s bold move on debit interchange

[ProSense]

The Fed’s bold move on debit interchange

The Fed’s swipe-fee proposals are out, and the market action in Visa and Mastercard — both of them are down more than 10 percent today — tells you everything you need to know. Basically, big card issuers won’t be able to charge more than 12 cents per transaction for debit-card purchases, and under one alternative their fees might be kept as low as 7 cents per transaction. That’s a massive reduction from the levels we’re seeing right now, which can range as high as 2 percent.

This is a victory for Dodd-Frank, a victory for consumers, and above all a victory for merchants over the financial-services industry. Assuming, that is, that the banks don’t find some way of killing, avoiding, or repealing it. Well done, Fed.

[karynnj]

1. This is the first that I have heard about it

For high end stores, this will make a huge difference. A purchase of something that cost $1000, could have cost the merchant $20 - and may now be 7 or 12 cents. High end retail may be the biggest beneficiary. It is not clear that will be passed on to the customers.

I think the credit cards take all the risk of the customer ultimately not paying - so there might be justification to relate the cost to the amount paid. I wonder if it could lead to lower limits for people with lower credit scores or simply less income.

[ProSense]

3. That's already happening

"I wonder if it could lead to lower limits for people with lower credit scores or simply less income."

This is a good thing. Credit card companies were in the business of preying on low income Americans, putting them in debt above their means and charging exhorbitant rates and fees.

Frankly, the shift to less credit is something I see as a good thing. Income inequity and other issue that affect many Americans need to be addressed, but the idea of people supporting credit card companies and bank executives through excessive fees should come to an end.

Recently, when it the rules kicked in limiting the fees they could charge consumers, there were concerns that retailers would see fee increases and then pass those through to consumers. Now, both ends are covered.

[karynnj]

4. This seems really good and well thought out nt

[TreasonousBastard]

2. I heard about this, and my first thought was that after my bank cancels my...

debit card I can't pay at the pump any more and will be charged up to 5 five bucks at a conveniently placed cash machine every time I want to buy something and don't have quite as much cash as I need. Or we go back to checks.

The argument is that a VISA debit charge actually costs the bank only a penny or so and so they should charge less. OK, but if they don't make enough, or(gasp!)lose money, they will stop offering the service. And the stores will suffer because they will see more credit card usage with much higher fees.

All this helps everyone just how? Sounds to me like everyone loses.

[quaker bill]

6. I would love to be in a business

where the product costs me one cent to produce and I can sell it consistently for 12 cents. It is hard to imagine how one does not make money on this.

I run a small scale business and the fees I pay every month to be able to accept debit cards at all are significant to my bottom line, then on top of this each debit/credit transaction comes with a swipe fee of 1.5 to 2.0 percent. So, when I sell a product for $100, the transaction costs visa or MC $0.01 but they bill me $1.50. It is worth it because more than half of my sales are debit/credit transactions.

How I expect they will react is that if they get to charge less per transaction, then the monthly account maintenance and statement fees will rise to make up a chunk of the difference.

[Phx_Dem]

5. This is another sign that Obama is evil, right Politichick?

:sarcasm: