New Debit-Card Fee Rules Hit Hard

[Swede]

A set of new debit-card restrictions proposed by the Federal Reserve on Thursday was more aggressive than investors feared, potentially causing billions of dollars in lost revenue for U.S. banks and stiffening competition for credit-card providers.

The new restrictions, most of which won't be made final until April 21, aim to cap the amount of money that debit-card issuers can charge merchants for so-called swipe fees. Banks would face a seven-to-12-cent-per-transaction cap on the interchange fees under either of the two proposals unveiled Thursday. That represents as much as an 84% drop from the current average of 44 cents. Analysts had been expecting a drop of up to 60%.

"Nobody expected it to be this draconian," said David Robertson, publisher of credit-card industry newsletter the Nilson Report. One bank executive said the cut was larger than the company's worst-case scenario. Banks, he said, will "push back."

Stocks of debit-card processors and banks that issue cards got hit. MasterCard Inc. plunged $25.73, or 10%, to $223.49. Visa Inc. tumbled $9.75, or 13%, to $67.19.

http://online.wsj.com/article/SB20001424052748704073804576023514056278814.html

[ixion]

1. protecting banking clients from predatory banks is "draconian"?

:eyes:

Yeah. Whatever, Mr. Robertson.

[DCKit]

2. As small business owners coast-to-coast do the Snoopy Dance. nt

[madmom]

3. They busted their ass to get everyone to use plastic, now that most

people use plastic in some way, they want to charge the merchants for letting them. I had a merchant tell me that I couldn't use my card to mail a package unless it was over $10. Who mails packages that big very often...not me. So do I go back to cash only???? I have one bill that if I want to pay on-line will cost me a $5 transaction fee EVERY TIME...wtf? I go to the post office and get a money order for .99 and a stamp.

[rhett o rick]

4. Think about Credit Unions. They are much friendlier. nm

[PBS Poll-435]

18. Still issue cards that have MCV/Amex/Discover interchange fees

Duh.

[Donnachaidh]

5. call a wambulance for the big issuers

my heart bleeds for them :nopity:

[City Lights]

6. Awwwwww, poor crybaby banks.

:nopity:

Unfortunately, the banks are gonna push back, so I predict their whining will be short-lived.

[tridim]

7. Banks are going to have to make money the old fashioned way.. Earn it.

Same way us commoners make money.

No more scams and rip-offs for them. :nopity:

[hobbit709]

8. I use my debit card maybe once a month.

All other times I pay cash. i try to keep at least $100 in my wallet.

[SidDithers]

9. There's the Obama administration, siding with the Big Banks again...nt

Sid

[izzybeans]

10. This is the biggest tax cut a small business could ever recieve

short of eliminating them all together.

The big issuers tax every transaction (aka skim off the work of others).

[Demstud]

11. That's one thing I've been happy about in the last couple years

There's been some big improvements in protecting us from the credit card providers with these new rules.

[TreasonousBastard]

12. How does this help me when the bank cancels my debit card? How does it help...

consumers or merchants who will be hit with the higher fees from credit cards. Or who will have to deal with checks again?

I use my debit card to pay bills and order stuff online, pay at the pump, and when I go out to buy stuff I never run short of cash. It would really suck without it, and if the bank isn't making money on it I won't have it much longer.

Sounds like everyone's a loser here-- they didn't have to cut the swipe fees that much.

[Dreamer Tatum]

14. It won't help consumers at all. And it screws small banksand credit unions. nt

[Historic NY]

13. I use my debit card all the time since I retired...my checks go direct....

I wonder why they (my bank) encourages its customers to choose credit over debit now I see it conditioning. They say its the same thing but its appears its going to be different.

[TreasonousBastard]

16. Right now, the charge to businesses for VISA debit is up to around 2%, but...

the charge for VISA credit is up to over 4%-- even on the same card. Naturally, the bank wants you to use the card the way they make more money on.

The cards can be used as credit or debit because not all stores have debit capability, although that's changing fast.

[SocialistLez]

15. I am doing pretty good about not using my debit card at small businesses

Ever since I heard about the outrageous fees they're charged and the monthly or yearly $$ they have to pay out to credit card companies just for taking their cards, I started carrying more cash on me or at least making a conscious decision to stop by the ATM before I go to a small business.

[Rex]

17. I am so happy I don't have a single credit card anymore nor will

I ever again.

[PBS Poll-435]

19. OP was discusing debit or so-called "check cards"

But thanks for your learned imput!

[backscatter712]

20. I've got no fucking sympathy for the banksters at all.

Remember back in the more functional days of the union, when banks actually made real money by letting you deposit your money with them, lending your money out, and charging maybe 10% interest when times were bad? They didn't have to charge swipe fees or overdraft fees or annual fees or monthly fees or service fees or any of that bullshit, and they STILL MADE MONEY!

Of course, the banksters are acting all butthurt right now - they're being pressured to make money in an honest way...

[onethatcares]

21. oh, you're thinking about way back when

you got 5% on your savings and loans were 8.5%. When the bank you patronized actually knew your name.

All that changed and we're screwn.