Bipartisan Legislation Introduced to Delay Debit Swipe-Fee Changes

The pushback on the debit card swipe laws that are set to take effect continues. When the new law takes effect on July 21, 2011, it will reduce the fees that debit card issuers charge retailers for each purchase made on a debit card. Two new bills, one in the House of Representatives and one in the Senate, request a delay in the rollout of the new law. The reason for the new bills is to allow more time to evaluate the consequences for banks, such as the loss in revenue, and for consumers, such as additionalfees from debit card issuers.

The Study

The bill proposes a delay in implementing the law change so the federal government can conduct an official study on how the 70% cutting of debit card fees will affect the debit card industry.

The majority of the lawmakers who are supporting the new bill are asking for a two-year delay. Some, however, are only asking for a one-year delay.

Effect on Consumers

In the end, it’s not only about the loss of revenue to the banks. More importantly, the concern lies with how the change in swipefees will affect consumers. Some major U.S. banks are already gearing up to raise rates and changefees on other banking services to make up the difference for the loss infees from debit card use.

If it’s not thefees, it’s the terms and conditions of use that banks are considering changing in response to the new law. Capping the amount of each debit purchase is one expected change. Other banks that issue debit cards are even considering limiting the number of debit purchases a consumer can make each month. If the debit card user goes over the limit,fees will be assessed for each additional debit card purchase.

In Limbo

The bill’s future — and its effects — are uncertain. It faces tough opposition in the Democratic-controlled Senate. Some lawmakers believe it is simply a delay tactic to reconsider the true effects of the law. The Federal Reserve may take the results of the government study and reduce the amount of the cutback. Others believe that the outcome of the study may end up killing the swipe law altogether.

Kristie Lorette

Kristie Lorette is an award winning credit specialist and an MBA graduate of Nova Southeastern University. Her lengthy tenure includes service at Merrill Lynch where she oversaw a $300 million dollar portfolio and 16 branches. At Merrill Lynch, Kristie specialized in consumer issues related to credit and mortgages. As a writer and researcher in personal finance, Kristie is also a contributor to Yahoo! Shine, Quizzle.com, Moneysmartlife.com and many other online and print publications.