Credit Card News
Advertising Disclosure
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from many credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.
Credit Card Applications » News » Other » Fed Interchange Ruling A Compromise For All

Fed Interchange Ruling A Compromise For All

By
Add to Favorites:
Fed Interchange Ruling A Compromise For All

The Federal Reserve finally voted last week to cap debit card interchange fees at $.21 per transaction, almost twice as high as the $.12 recommended cap that was proposed in the Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act. Consumers will most likely not reap any benefits while banks are happy that the cut in fees isn’t as steep as the original proposal. The new rule goes into effect Oct. 1, later than retailers had anticipated.

Consumer Beliefs

Retailers and other merchants were hoping that swipe fees would be limited to the .12 per transaction, but banks lobbied hard to keep fees higher. Estimates of losses to card issuers from the proposed $.12 cap were $10-14 billion annually.

Consumers, meanwhile, are hoping that the savings that merchants will see as a result of paying less in debit card swipe fees to banks will be passed along to them as lower prices. Most experts are advising consumers not to hold their breath. According to the Federal Reserve, lowering interchange fees in other countries did not automatically translate into lower prices for consumers.

Bernanke Speaks

Federal Reserve Chairman Ben Bernanke said of the final decision, “I think this is the best available solution that implements the will of Congress.” Adding to the fact that the powers that be on Wall Street and in the Senate had been urging the Fed to see it their way, the pressure was on for the Fed to make the decision they did in finalizing the fee amount for swipe fees.

Retailers React

While merchants were originally paying an average of $.44 per transaction for each time a customer swiped a debit card, they are not truly happy about the $.21-cent fee either. Originally, the talk was that the swipe fee would land around 12 cents per transaction, so $.21 per transaction is almost double what retailers were expecting. Smaller retailers are claiming that they still may be forced to increase prices to consumers, even though the swipe fees will be lower than what they have been paying.

Banks and other financial institutions with less than $10 billion in assets, government benefit cards and some prepaid cards are exempt from the new regulations. In these situations, the swipe fees will remain a percentage of the transaction with no cap.

Add to Favorites:

Related News:

Citi Card Tracker Unveiled

By Dar Dowling, Posted: December 8, 2016

There is a new feature in town now that Citi credit cardholders in the U.S. can track where their replacement card is every step of the way as it travels to their mailbox. This new feature is available in the Citi Mobile App, whether the ... Continue reading
New Digital Wallet From SDCCU

By Dar Dowling, Posted: December 7, 2016

The San Diego County Credit Union (SDCCU) is rolling out their brand new digital wallet app for iPhone users. With the app people can use their phone to safely do their banking, whether that means using their phones to expedite cash ... Continue reading
Free Pizza on Papa John’s & VISA

By Dar Dowling, Posted: December 6, 2016

Eating pizza while watching a football game is a time-honored American tradition, so it’s not surprising that VISA, has teamed up with Papa John’s to give fans a little more this season. If fans use Visa Checkout they can take advantage of ... Continue reading
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
Get 0% Intro APR on Balance Transfers and Purchases for 21 months. After that, the APR will be 12.24%-22.24% based upon your creditworthiness.
For Excellent/Good Credit
Earn 1% cash back on gas and grocery purchases. Terms apply.
For Fair Credit
Guaranteed $500 Unsecured Credit Limit
For Bad Credit