The Battle over Debit Card Fees Intensifies
As the House and Senate are working to merge into one their two separate financial overhaul bills, one amendment, found in the Senate version, is pitting huge banks against giant retailers, leaving consumers wondering what it all means for them.
At issue are the debit card fees, which issuers charge retailers for each card transaction they accept. If the Senate amendment remains in the final bill, the Federal Reserve will be charged with setting “reasonable and proportional” limits on these fees, known as “interchange fees” in the payment card industry, which are currently set bi-annually by Visa and MasterCard.
Both sides have launched a huge lobbying effort. At stake are $10 billion that JPMorgan Chase, Bank of America and the other issuers stand to lose if Wal-Mart, Target and the other retailers get their way. The numbers are staggering. In 2009 alone, consumers used Visa and MasterCard debit cards to pay for $1.21 trillion in purchases, totaling $19.7 billion in fees paid by merchants, according to data from The Nilson Report, a trade publication.
But what’s in it for the consumer? How will the outcome of these battle affect us? Well, if the retailers get their way, they promise lower prices. However, the banks threaten that lower interchange fees on debit cards could result in higher fees elsewhere, less generous rewards programs or even the introduction of an annual debit card fee.
“We are convinced that fees to consumers would go up and services would be reduced,” said William Sheedy, group president of the Americas for Visa Inc.
“Their response to being told that they’re doing something wrong is to say, ‘OK, if you keep us from doing something wrong to this person, we’re going to go do something wrong to somebody else,’” counters J. Craig Shearman, vice president for government affairs at the National Retail Federation.
(Via Google.com)
