Businesses can expect higher processing fees
New federal laws have severely restricted the price card processing companies can charge to consumers for accepting debit transactions, and therefore the costs for dealing with credit purchases will likely rise in the near future.
After fierce lobbying by both the banking and retail industries, the Federal Reserve Board recently placed a 21 cent cap on debit card transaction fees, down from the current average of about 44 cents per debit purchase. But because the law did not restrict fees for all card purchases, processers are expected to significantly boost those for credit transactions instead, according to a report from Ideal Cost, a firm that reduces credit card fees for merchants.
“What many companies aren’t privy to is that these rate reductions are specifically for swiped debit card transactions,” said Robert Livingstone, president and founder of Ideal Cost. “Visa and MasterCard have announced historically high credit card processing rate increases to offset these rate reductions.”
The debit card cap limit is expected to cost the banking industry billions per year, and retail advocates say that the lower prices for these purchases may be passed on to consumers.