Fed Interchange Ruling A Compromise For All - Other News

ADVERTISING DISCLOSURE

ADVERTISING DISCLOSURE:
Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from most 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

Fed Interchange Ruling A Compromise For All
The content is accurate at the time of publication and is subject to change.

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.

Disclaimer: This editorial content is not provided or commissioned by the credit card issuer(s). Opinions expressed here are the author's alone, not those of the credit card issuer(s), and have not been reviewed, approved or otherwise endorsed by the credit card issuer(s). Reasonable efforts are made to present accurate information, however all information is presented without warranty. Consult a card's issuing bank for the terms & conditions.
All rates and fees, and other terms and conditions of the products mentioned in this article/post are actual as of the last update date but are subject to change. See the current products' Terms & Conditions on the issuing banks' websites.
Add to Favorites:

Related News:

Discover Cuts Price Protection Benefits from Credit Cards

Posted: August 20, 2018

If you have a Discover card and like the Price Protection benefit that comes with it, you might want to take advantage of it sooner than later. Discover has decided to do away with this benefit. This benefit will no longer be part of your ... Continue reading
The New Citizens Bank Cash Back Plus World MasterCard

Posted: August 17, 2018

Citizens Bank has rolled out their new Cash Back Plus World MasterCard, offering cardholders 1.8% cash back when they go shopping. This is an upgraded version of their previous card. With this new version, cardholders can earn unlimited ... Continue reading
Bonus for the IHG Rewards Club Premier Card Gets an Upgrade

Posted: August 16, 2018

Have you been thinking about applying for the IHG Rewards Club Premier credit card? If so, you may want to check it out now because they just increased the bonus - bumping it up from 80,000 points to 100,000 points. Cardholders get the ... Continue reading
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.
Earn 5% cash back at different places each quarter like gas stations, grocery stores, restaurants, Amazon.com, or wholesale clubs up to the quarterly maximum each time you activate.
For Excellent, Good Credit
INTRO OFFER: Discover will match ALL the Miles you've earned at the end of your first year, automatically. For example, if you earn 30,000 Miles, you get 60,000 Miles.
For Excellent, Good Credit
0% Intro APR on Balance Transfers and Purchases for 18 months. After that, the variable APR will be 15.74% - 25.74% based on your creditworthiness
For Excellent, Good Credit
You've successfully subscribed!

Please specify the following:All these fields are optional

Your Credit History
Themes you are interested in:

By providing this information you help us make our news letters more useful and informative. Thank you!