The news source writes that since the law took effect, the largest debit-card issuers, “which stand to lose billions of dollars in annual revenue under the Fed caps,” have already begun to eliminate rewards programs and free checking — and that “new fees may be next in the effort to help make up the difference, according to analysts and executives.”
Every time a customer pays with a credit or debit card, the merchant must pay a fee to the bank or financial institution to process the transaction. The fees vary greatly depending on debit or credit, whether a signature or a PIN is required, and what the merchant has negotiated with the bank. In Connecticut, the average fee for debit transactions is 44 cents.
Reply Letter From U.S. Senator Barbara Boxer to Mitch Goldstone (President & CEO, ScanMyPhotos.com, editor of WayTooHigh.com)July 13, 2011
Dear Mr. Goldstone:
Thank you for writing to me regarding legislation that would postpone proposed reductions in interchange fees that credit card companies impose on debit card transactions. I appreciate hearing from you on this important issue.
Last year, as part of the Wall Street Reform and Consumer Protection Act (P.L.111-203), Congress enacted an amendment by Senator Richard Durbin requiring the Federal Reserve to set allowable levels for the interchange fees that would be “reasonable and proportional to the cost incurred by the issuer.” As directed by the Durbin Amendment, the Federal Reserve has issued a final rule reducing these fees to 21 cents per transaction, plus 0.05 percent of the transaction’s value, beginning October 1, 2011.
I am pleased that the Senate recently defeated legislation calling for a lengthy study of the Fed’s proposed rule. I believe that this rule will enable small businesses and merchants to lower their costs and provide discounts for their customers, and that further study would needlessly delay an important reform. Be assured that I support the Durbin Amendment and will continue to oppose efforts to repeal or undermine it.
Again, thank you for writing to me. Please feel free to contact me again about this or other issues of concern to you.
United States Senator
The group that governs France’s bank- card industry agreed to cut by as much as 36 percent interbank fees for bank card transactions to settle a competition regulator’s investigation
NRF Senior Vice President David French appeared on CNBC’s Closing Bell to discuss the ramifications of the ruling for retailers and express disappointment in the Fed’s decision.
“This rule will not provide businesses and consumers with the savings they deserve under the law,” said Scott DeFife, executive vice president at the National Restaurant Association.
First they encourage consumers to sign for debit purchases despite the fact that such purchases are much less secure; then they argue that they need high interchange fees because they have high fraud costs. This is financial chutzpah incarnate: the equivalent of the man who kills both his parents and then pleads for clemency on the grounds that he’s an orphan.