Congress Takes a Swipe at Swipe Fees

What's Hot

How a Mexican Tariff Will Boost the Cost of 6 Common PurchasesFamily

Report: Walmart to Begin Selling CarsCars

How to Protect Yourself From the ‘Can You Hear Me?’ Phone ScamFamily

Trump Scraps FHA Rate Cut — What Does It Mean for You?Borrow

This Free Software Brings Old Laptops Back to LifeMore

10 Overlooked Expenses That Ruin Your BudgetFamily

Protecting Trump Will Cost Taxpayers $35 MillionFamily

8 Creative Ways to Clear ClutterAround The House

8 Tuition-Free U.S. CollegesCollege

Study: People Who Curse Are More HonestFamily

Tax Hacks 2017: Don’t Miss These 16 Often-Overlooked Tax BreaksTaxes

The 3 Golden Rules of Lending to Friends and FamilyBorrow

Porta-Potties for Presidential Inauguration Cause a StinkFamily

12 Surprising Ways to Wreck Your Credit ScoreBorrow

These Are the 25 Best Jobs in the U.S.Jobs & Work

If you have a debit card, the cost for using it is likely to drop - for your local merchant. Whether you'll see the savings or not, only time will tell.

Wall Street reform is coming – and a compromise was reached today regarding one of its most hard-fought provisions.

Negotiators from the House and Senate agreed today to allow the Federal Reserve to regulate rates for debit card transactions. The fees, known as “swipe” or interchange fees, are paid by merchants in exchange for accepting debit cards. According to Illinois Senator Dick Durbin, almost $50 billion in interchange fees was collected last year and roughly 80% of that money went to the 10 largest banks in the U.S., Visa and MasterCard.

While other western countries regulate debit and credit card transaction fees, this will mark the first time such oversight will happen in the U.S. Although not all banks are affected. Those with less than 10 billion in assets – 99% of all banks – are excluded.

Since it’s likely that the Federal Reserve will guide interchange fees down from their current average of 1.6%, the big winners in the negotiation are merchants, while the losers are the mega-banks that issue debit cards. Visa and MasterCard, on the other hand, escaped relatively unscathed: today’s compromise included a provision that the Fed can’t regulate network fees, which are fees that Visa and MasterCard charge and keep for themselves. The stocks of both companies jumped on the news.

There were other parts of the final compromise that weren’t celebrated by consumer advocates: for example, fees on prepaid, re-loadable debit cards – cards often used by the poor, and ones often mentioned as having the highest fees – are excluded from Fed regulation. Also unregulated will be debit cards used by states to provide payments for things like unemployment insurance.

You can read a summary of the compromise here.

Rep. Peter Welch, a House Democrat from Vermont involved in the negotiations, said, “It preserves key protections for the grocers, retailers and country store owners most affected by out-of-control swipe fees, while addressing legitimate concerns of the industry. I am confident this agreement will be approved by the full committee because every conferee represents small business owners who are tired of serving as a piggy bank for Visa and MasterCard.”

The sponsor of the amendment, Illinois Democratic Senator Dick Durbin, said, “I’m pleased that we were able to reach an agreement which makes minor changes to strengthen consumer protections and bring competition to a market where there is none,” Durbin said. “Most importantly, we’ve addressed the concerns of states regarding their ability to provide services to the unemployed and the concerns of small financial firms regarding their ability to provide services to the unbanked.”

While this compromise has yet to be voted on as part of the final bill, it’s now expected to be passed.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!


Read Next: Where to Sell Your Stuff for Top Dollar

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,829 more deals!