Many Americans have turned to using debit to avoid taking on credit card debt, and while financial institutions argue that a new rule to limit the fees banks charge for these transactions will add to consumers’ costs, one lawmaker said such a system can be successful.
U.S. Sen. Dick Durbin of Illinois recently pointed out that for all the lobbying on the part of banks, and proclamations that imposing a limit on debit card transaction fees would lead to higher costs for consumers, there is already a successful model system in place in Canada, according to a report from the Financial Post. In that country, all banks continue to issue debit cards even though there is no such thing as a debit interchange fee.
But those in the financial industry say that many banks, particularly those that are smaller and community-based, will lose a large portion of their revenues as a result of the proposed restrictions, the report said.
The rule would cut debit card transaction fees to just 12 cents per purchase, down from the current average of about 44 cents.