Senate rejects pro-bank swipe-fee measure

[marmar]

WASHINGTON (MarketWatch) -- A legislative measure that would have delayed and curtailed a Federal Reserve debit-card interchange-fee reduction rule was rejected Wednesday afternoon. The measure, which backers sought to attach to a bill that is expected to pass in the Senate, failed to obtain the filibuster proof 60 votes and failed by a vote of 54 to 45. The provision sought to replace a Fed proposal that will be a boon to retailers because it cuts debit interchange fees charged to them by an average of 73%. Shares of Visa and Mastercard each dropped over 5 percent after the vote.


http://www.marketwatch.com/story/senate-rejects-pro-bank-swipe-fee-measure-2011-06-08?link=MW_home_latest_news

[xchrom]

1. recommend

[elleng]

2. Trying to understand.

The Fed proposal that will be a boon to retailers, because it cuts debit interchange fees, STANDS, right?

Who wanted to delay this Fed proposal, and why?

[FBaggins]

3. The banks were the ones who wanted it delayed

Stopped really.

As I understand it, the maximum fee allowed is significantly lower than the cost of providing the service.

But the proposal isn't particularly pro-consumer since there's no way that the banks are going to give the service away for less than it costs them to provide and consumers don't see the fee now (and do we think WalMart will lower their prices when the fee goes down?). The end result could be monthly fees for debit cards or transaction maximums that result in multiple fees per transaction. IIRC, one of the big banks talked about a $50 cap on debit card transactions. So $200 in groceries will mean that you have to swipe the card four times (and the vendor pays four fees).

Don't know how this shakes out, but it won't be pretty... and legislation that many thought was supposed to be pro-consumer just turns out to be the lobbying arms of the big retailers fighting those of the big banks.

[elleng]

5. Thanks. Found some info.

'The debit-card rules were a major part of the Dodd-Frank financial regulation bill passed last year and the Senate vote was the first major challenge to the new law. . .

Even with the defeat, the vote represented a remarkable come-from-behind lobbying campaign by banks to recover from the drubbing they took during the anti-Wall Street atmosphere that pervaded last year. The debit card measure, sponsored by Senator Dick Durbin, an Illinois Democrat, passed last year by a 2-to-1 margin after little debate and no hearings.

The Wednesday vote, which followed a vigorous floor debate, was a victory for retailers, who have complained that banks and the companies that control the largest debit-card networks, Visa and MasterCard, have consistently raised the fees on debit card transactions even as the market has grown rapidly and technology costs have declined. . .

Among the heavy hitters who worked to influence votes on the debit card fight were former House Majority Leader Dick Gephardt, a Democrat, who represented Visa, while the retailers had the former Republican Senator Don Nickles of Oklahoma in their corner.'

http://www.nytimes.com/2011/06/09/business/09debit.html?pagewanted=1&hp

[notadmblnd]

6. currently retailers pay between 45 and 50 cents per transaction when people use their credit/debit

the new law caps the fees to 12 cents if I am correct. I don't see it as being a boon to retailers, but I do think that gas stations can stop charging two different prices based on cash or credit/debit.

[FBaggins]

7. I haven't seen a different price for cash vs credit/debit in years

Must be something regional.

Also... I don't think that the change impacts credit cards. That's a different fee structure.

I don't see it as being a boon to retailers

The big ones sure seem to think it is. It's the WalMarts of the world that are pushing this.

[notadmblnd]

8. It's standard operating procedure here in Michigan

Gas at the Sunoco on M-59 in Waterford was 3.98 today for cash. 4.09 with credit. The fees are higher for credit if that is what you mean by different structure? I know that banks encourage their customers to use their debit cards as credit instead.

[FBaggins]

9. By "different structure" I meant credit vs debit.

Not credit vs. cash. I presume in your case that if you use your debit card (as a debit card of course), you pay the credit price?

By different structures, I mean that the fee structure that the collecting bank charges the merchant is different for credit transactions. They've been getting closer, but this will change that back.

[hobbit709]

4. What happened. Did the bank lobby not raise the ante high enough?

[girl gone mad]

10. Wal-Mart lobby outspent them maybe?

Good news, no matter.

[FBaggins]

12. Good news?

Do you assume that Walmart will lower their prices in response?

You're not the one paying the fee now. You quite possibly will if this is implemented.

[tritsofme]

11. It will mean the end of free checking/rewards for a lot of people.

[FBaggins]

13. Free checking is already ending

Most of the major banks are well down that path already... and many are ending their rewards programs too (for debit cards)

What it will mean is an end to free debit cards... or pain-in-the-neck usage restrictions.