The debate over a rule from the Federal Reserve Board that was designed to help consumers avoid credit card debt is still ongoing, as both retailers and banks engage in a war of words over proposed changes to swipe fee regulations.
Retailers are still pushing hard for Congress to allow the Federal Reserve to enact a rule that would limit the amount banks can charge for processing a debit card transaction, even in the face of stepped-up lobbying efforts from the financial industry, according to a report from the New Orleans Times-Picayune. Currently, federal lawmakers are deciding whether to delay the implementation of the rule by two years.
Small business owners in particular say that the interchange fees cause them to operate with a very slim profit margin, often in the neighborhood of just 1 percent, the report said. However, banks argue that community institutions will be the most hurt by these changes, as they do not have the funds to absorb the lost revenues from the drastically lowered fees.
The rule, which could be implemented over the summer, would limit debit card swipe fees to just 12 cents per transaction. The current average is about 44 cents.