Photo (cc) by Tony Webster
The Federal Reserve issues a report every two years about interchange fees – fees businesses have to pay card processors for accepting plastic.
Although merchants pay them, the fees matter to us because in theory, the places we shop could be recouping those fees by charging us more when we pay with debit or credit cards.
The good news is the new report shows average fees have dropped by half. Thanks to part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, debit card fees dropped, averaging 24 cents per transaction at the end of 2011, down from an average of 50 cents prior to the legislation.
There are other issues, though. The report says prepaid debit cards are becoming much more popular, with the number of transactions doubling over two years to 2.43 billion transactions worth $83.6 billion. Prepaid cards are often promoted by celebrities and are also laden with hidden fees.
While debit card fraud was down from the previous report, it was still an eye-opening $1.38 billion. A concern, since debit cards don’t have the same level of consumer protection afforded by credit cards.