Senate Rejects Delay of Debit Interchange Fee Cap

Big banks can’t seem to catch a break. On Wednesday afternoon, they lost a vote that would have delayed the implementation of the rule capping so-called “swipe” fees.

Read These Next

Better Investing

The following post comes from partner site LowCards.com

On Wednesday afternoon, the Senate struck a blow against big banks by failing to pass a measure that would have postponed the implementation of reduced debit card interchange fees.

The legislation would have required a delay to study the unintended consequences of capping the swipe fee. The cap is a new regulation under the Durbin Amendment.

Sixty votes were needed and only 54 senators voted for the delay.

This is good news for retailers who have the most to gain from a lower interchange, or swipe, fee. The Fed has proposed capping the fee at a maximum of 12 cents per swipe. Banks currently charge 1-2 percent, or an average of 44 cents per debit card transaction. Banks have lobbied hard to keep this fee since a smaller interchange fee would be a devastating revenue loss for banks.

The Federal Reserve board is now working on final debit card interchange rules, which are expected to be released by the end of the month. The new fees are scheduled to take effect on July 21.

“This is a big loss for the banks,” says Bill Hardekopf, CEO of LowCards.com. “This cap on interchange fees will significantly cut banks’ revenue. Traditionally, when these revenue cuts occur, banks find new fees and charges to levy on the consumer to make up for the loss in revenue. Since it is unlikely that retailers will pass on the savings to consumers, this regulation could hurt consumers. The only real winners appear to be the retailers.”

Sign up for our free newsletter

Like this article? Sign up for our newsletter and we'll send you a regular digest of our newest stories, full of money saving tips and advice, free! We'll also email you a PDF of Stacy Johnson's "205 Ways to Save Money" as soon as you've subscribed. It's full of great tips that'll help you save a ton of extra cash. It doesn't cost a dime, so why wait? Click here to sign up now.

Read These Next

Comments

  • Anonymous

    The problem isn’t cutting the fees to big banks, it’s cutting income to small community banks and credit unions.  There is supposed to be an exemption for smaller institutions, but it won’t work in practice, because merchants can choose not to accept debit cards from community banks and CUs.  Ultimately, big box merchants will save more than small businesses, and big box banks will find other ways to earn fees from customers, while community banks and credit unions will pay the price.

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 1,611 more deals!