Debit card interchange fee debate takes turn
In the coming months, the Federal Reserve is expected to issue its final decision as to whether the recently proposed interchange fee caps on debit card transactions will take effect.
The proposal would cap the interchange fees merchants pay on transactions at 12 cents per swipe, down from the 44 cents they currently pay per debit card transaction.
Many merchant groups and consumer advocates support the measure as they believe store owners would then be able to pass on savings to shoppers, WalletPop reports. However, financial institutions have been fighting against the bill as it would cost them as much as $20.5 billion each year. In addition, it may make operations more challenging for small financial service providers.
“We support the intent of the new law requiring lower interchange fees … but the Fed’s proposed method for lowering these fees may not allow banks and credit unions to recoup their actual costs for providing debit cards,” Travis Plunkett, legislative director of the Consumer Federation of America, told WalletPop.
While major financial institutions have been attempting to fight the caps, some have proposed adding extra charges not specifically banned by the regulation to help offset lost revenue.