A law is supposed to go into effect next month that would radically reduce the fees retailers pay banks when you use a debit card, costing the banks billions. But will it happen - and more to the point, should you care?
Retailers now pay an average fee of 44 cents every time they accept a debit card. But a new law slated to go into effect next month would reduce that fee to 12 cents. Good news for the merchants that pay it, bad for the banks that collect it.
While this is, literally, nickels and dimes, it adds up: Merchants process 38 billion debit card swipes yearly and pay a total of $16 billion in bank fees.
As you might expect, the banks hate the idea of losing those fees and retailers hate the idea of continuing to pay them. And both sides say they’re only thinking of us, the consumer.
Banks say that without the revenue from these “swipe” or interchange fees, they’ll be forced to charge us more for things like checking accounts. (Something they’re already doing.) Retailers say that if they have to pay less to accept our debit cards, they’ll not only pass the savings along to us, they’ll be able to hire more workers. (As if none of this windfall will make it to their bottom lines.)
This argument was supposed to already be over. As I mentioned, a law was already passed last year that essentially instructed the Fed to cap the fee at 12 cents per swipe on July 21. So what’s happening today? The Senate will vote on whether to delay the start for an additional year for “further study.”
As with many things in Congress, big bucks are being spent on lobbyists for both sides. And both sides promise either pain or pleasure for Main Street. And as is also common, the likelihood that any of the billions involved might actually benefit consumers in any meaningful way is practically nil.
To learn more about the issues and what’s happening today, check out this article from The Associated Press.