Proposed debit card interchange fee of 12 cents maybe coming & the pitfalls.

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Proposed debit card interchange fee of 12 cents maybe coming & the pitfalls.

Postby debitcard guru » Wed Dec 22, 2010 7:44 am

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If this low fee does happen.
Merchant could refuse higher rate debit cards like Federal Benefit (SS,SSI,SSD, etc), unemployment debit card and even tanf debit card which was not intended by the durbin amendment. If the merchants refused higher rate cards those people would have to use atms more.


Banks could stop issuing debit cards or go back to atm only cards.
Banks would start or increase their monthly checking account fees.
Banks could start having annual fees for debit cards.
Banks could even start charging consumer a fee for each time you use a debit card.

They are way around that.
Banks replacing their debit cards with prepaid debit cards. However, do to kim kardashian prepaid debit card U.S. congress in 2012 may consider limiting fees that could be charged.

Big banks could outsource their debit card business to smaller banks.


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Postby Mogul of Pineapples » Sun Jan 02, 2011 2:18 am

It could even be lower than 12 cents. One plan involves a 7 cent fee and the other involves a sliding scale up to 12 cents as the max. All those outcomes you mention are real possibilities.

I think the fees are a bit low when you consider that no one is forcing a businesses to accept debit or credit cards. A flat 7 cent fee on a $500 purchase might not be fair to the bank when you take into account the fraud liability protection that must be provided.

The biggest problem with debit card fees I do agree with are small purchases like a cup of coffee or a hamburger. I side with 7-11 and others that those eat up too high a percentage but for larger transactions I don't think the fees are too far fetched.
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Postby debitcard guru » Sun Jan 02, 2011 4:34 pm

Mogul of Pineapples

Do merchants want us to go back to checks & cash? Does the Federal Reserve want more checks coming through their system and may have to reopen an office they closed? I should of added that to my comment. Ever check in the U.S. goes through the Federal Reserve.

Durbin said himself that it was even to low.

He told state & federal agencies the amendment wouldn't affect their benefit debit cards. He also told small banks & the prepaid card industry that the amendment wouldn't affect their debit cards. Which it doesn't but doesn't prevent the merchant from refusing those cards if they take the lower rate debit cards. Unless, they look at the card, how would merchants know?

If I recall correctly, Durbin also said, consumers shouldn't have to worry which debit card will work & which won't.

The only chance is if the courts find it unconstitutional by TCF lawsuit. Which I hope they do.

Merchants shouldn't have to pay for banks reward programs, that I agree with but that is all I agree with them on.

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Postby Mogul of Pineapples » Fri Jan 14, 2011 8:54 pm

Do merchants want us to go back to checks & cash? Does the Federal Reserve want more checks coming through their system and may have to reopen an office they closed?


Apparently some stores do. Many small businesses like restaurants, dry cleaners and party shops want all cash but ultimately I believe the reason for that motive is so they can commit tax fraud, the cost of the fees is a seconday motive, but you won't hear them ever say this.

What Durbin said he wants and what has been proposed thus far don't correlate too well.
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Postby debitcard guru » Sat Jan 15, 2011 9:35 am

With Visa announcement supporting a two interchange fee system. It looks like the smaller banks & credit union can keep their current rate structure. I do expect Mastercard to follow or smaller banks & cu may change to Visa. I think MasterCard is waiting to see what happens with Congress & the TCF lawsuit. The merchants won't be able to tell, which debit card has a higher rate to which one has a lower rate. Merchants forget consumers are not dumb. They will go with the cheapest way possible even if it is a hassle.



Here are some things concern me.
Some smaller banks & cu may raise their rate on checking & other fees if they keep their money in the big banks.

If a lot of customers move to a smaller bank, that could cause the bank to go over the $10 Billion dollar which is not excluded from the durbin Amendment

If to many customers move to a smaller bank & cause the big banks to fail, this might cause a economic problem.

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Postby Cucumber » Mon Jan 24, 2011 3:33 am

But wait, this is only for purchases where a pin is entered yea? then purchases with a signature will still be the same and have the same fees??

All that is gonna happen is banks will up the debit card rewards for purchases with signatures and then everyone will stop doing the pin type.
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Postby debitcard guru » Mon Jan 24, 2011 6:46 am

Cucumber wrote:But wait, this is only for purchases where a pin is entered yea? then purchases with a signature will still be the same and have the same fees??

All that is gonna happen is banks will up the debit card rewards for purchases with signatures and then everyone will stop doing the pin type.


No. It is either method signature or pin. It is actually a complicated mess. TCF delayed the lawsuit until the U.S. Federal Reserve decides on a fee. The proposed fee is not set in stone. They have a lot of comments against this, including a lot from consumers. They don't want to pay a annual or monthly debit card fee or a higher checking account fee. The amendment will eliminate free checking

After reading some information all banks could be affected even those that are excluded from the amendment If the fed decide forcing two unaffiliated network rule. If they don't do this, then smaller banks & credit unions won't have to change their fees. This would mean low income would be forced to go to smaller banks.


It also be a nightmare reprogramming the card network system.

Some U.S. banks said they will stop debit cards all together and go back to the old atm only card that was almost instinct. Some will switch to prepaid debit cards. Some may switch to Decoupled Debit Cards. Which means you can using any checking account you want with it or keep your current checking account. This is rules don't apply to Decoupled Debit Cards according to a bank comment.



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