Benefits of cap on debit card fees not expected to last

From: The Washington Post

By Odysseas Papadimitriou

The Durbin Amendment — the legislative impetus for the Federal Reserve capping debit card interchange fees — was positioned as a boon for small business.

Legislators believed that by limiting the fees banks could charge merchants for debit card transactions, they would effectively lower costs for merchants and maybe even bring about lower prices for consumers as well. But while the controversial nature of this law has been evident from the time it was passed in May 2010 to October 1, 2011, when a roughly 24-cent per transaction cap took effect, we finally have the perspective required to answer the question: Has the Durbin Amendment done anything to reduce the financial burden for small business owners and consumers?


Little Lenders Benefit From Debit-Card Rule

From: Wall Street Journal

by Robin Sidel

It isn’t every day an 11-branch bank in Iowa gets a financial leg up on J.P. Morgan Chase & Co., Wells Fargo & Co. and Citigroup Inc.

West Bank Inc. in West Des Moines is likely to collect more money than the nation’s biggest banks each time a customer uses a debit card. The reason: About 7,300 of the 7,436 U.S. banks are untouched by the Durbin amendment, part of the Dodd-Frank financial overhaul.


Credit, Debit, Prepaid Relationships in 2012- Are You Prepared?

From: Credit Union Times

Credit card portfolios have had a rough go at things the past couple of years. 

Even with all the media attention on credit union credit cards in 2010, they grew just 2% that year. The previous five-year trend was an annual average growth rate of 10% to 12%.

Several elements came together to slow credit union card growth. First, the impact of the CARD Act, followed by the economic issues, high unemployment and housing crisis, left many credit unions in ultra conservative positions with their lending if not hounded by regulations and auditors, especially in the area of unsecured credit card lending.


Brussels turns its sights on card fees

Editor’s Note:  Before European regulatory authorities enact new regulations setting price controls on interchange, they should learn from the US experience and recognize that: 1) price controls never protect consumers; and 2) a mandate that shifts card processing expenses from retailers to financial institutions will ultimately result in consumers picking up the tab.

From: Financial Times

By Alex Barker in Brussels

Brussels has launched a fresh assault on fees charged to process card transactions, arguing that new legislation may be needed to promote competition and reduce costs for consumers.


Retail Groups Sue Federal Reserve Over Debit-Fee Rules

From: Supermarket News

WASHINGTON — Three industry associations, including Food Marketing Institute, filed a lawsuit in federal court here last week saying the Federal Reserve failed to follow the requirements of last year’s sweeping financial reforms when it set a cap on debit-card interchange fees this year.

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“FMI’s members will suffer significant and irreparable monetary injury directly traceable to the Board’s misconstruction of the statute,” George Green, FMI general counsel, said in a statement. “The bottom line is that we are fighting back against a rule that ignores the clear language in the law and will put more money in the pockets of the big banks at the expense of retailers and their customers.”