The banks are bribing consumers with a sweepstakes – giving away two iPads – to get people to say they love paying the highest debit card interchange fees in the world. Chance of winning an iPad is about as great as having the banks admit they illegally fixed credit card fees.
The fees Chung pays are a tiny fraction of Wall Street’s swipe fee windfall; banks take in a combined $48 billion a year from these “interchange” fees on debit and credit cards, according to analysts at The Nilson Report. That money comes out of the pockets of consumers as well as merchants, as stores pass on whatever costs they can to their customers.
Advocacy group Consumer Watchdog reported that “34 members of the U.S. House of Representatives that offered amendments to weaken consumer protections in the House financial reform package received $3.8 million in campaign contributions from the financial sector in 2009, an average of $111,000 each.”
Durbin replied in a letter yesterday that basically tells Keating he’s full of it.
From Durbin’s letter:…You say in your letter that the amendment Congress enacted last year will have “negative effects” on “banks of all sizes, on consumers and on the broader economy.” This claim sounds alarming, but your industry seems to make this claim in response to any and all efforts to reform the interchange fee system…I urge your association to stand down your massive misleading lobbying effort which is aimed at preventing the Federal Reserve from ever coming forward with reasonable financial regulations, and instead to let the regulatory process continue as Congress intended.
But gasoline station owners say the higher charge for using a credit card enables the station to recoup the costs for credit fees that rise as gas prices skyrocket, cutting deep in an already slim profit margin.
In Canada, interchange fees are “zero, and yet [banks] continue to issue the cards and they continue to use them,” the senator told reporters in Washington, D.C. last month.