Federal Reserve Raises Swipe Fee Cap In Victory For Wall Street

Source: Huffington Post

WASHINGTON -- The Federal Reserve delivered the punchline Wednesday to the year-long joke that has been the lobbying blitz over debit card swipe fees. Amid heavy Wall Street pressure, the Fed nearly doubled the amount it will allow banks to charge retailers and consumers under a new regulation while effectively exempting an entire class of debit card transactions from the rule altogether.

The swipe fee debate dominated the Senate for months, as nearly the entire U.S. retail industry battled banks in Capitol Hill backrooms. Last year's Wall Street reform bill required the Fed to write a rule capping swipe fees on debit cards, which banks charge retailers for the privilege of accepting plastic.

The central bank initially proposed a 12-cent limit on those fees in December, following a Fed survey of banks that found that the median cost of processing a debit card transaction was 7 cents, with an average cost per swipe of 4 cents. The 12-cent cap would have left banks with a profit margin of about 70 percent on debit cards based on the median cost, but represented a reduction of almost 75 percent from the current average swipe fee of 44 cents per transaction.

Wall Street has been pressuring the Fed all year to reconsider the rule, and on Wednesday, that pressure paid off: The central bank raised its proposed cap on swipe fees to 21 cents, plus 0.05 percent of the transaction amount and 1 cent to cover the costs of protecting against fraud. All told, the Fed said it will allow banks to charge a maximum of 24 cents per transaction, on average.

Read more: http://www.huffingtonpost.com/2011/06/29/swipe-fees-cap-federal-reserve-wall-street_n_887193.html

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In a related story, Billionaire pays $2.75 ATM Fee:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=439x1388416

LOL

until the banks decide that they aren't making enough money from swipe fees under the new rules, and just stop allowing POS transactions.

It will make a big difference at the shop where I work, as the bank fees are about the last thing taken out of the gross - 1% or so is a real difference if your margin is 3%.

...also nice to hear that US bank fees will be down to about parity with the better-regulated European banks.

From the article, this should cost the banking industry $1.35 billion or so per month. The mental gymnastics needed to see that as a "Wall Street Victory" are beyond what I can do, and why would anyone want to? Congrats to the regulators - they did well!

It was only a trial balloon. Score another for Dodd-Frank.

...as far as the inequality of wealth distribution. The fees definitely and disproportionately gather wealth from everybody and redistribute it into just a few very wealthy hands.

Cutting the fees gives all retailers a break, large and small, so its a step in the right direction.

On edit - I think the negative tone of the OP is in part a tendency to spin everything as bad news, which has been a problem among the Dems at least since 2000.

I would guess that the negotiators knew they were going to be in for a big fight on this bill, so they opened by suggesting a cap much lower than they knew they could get. The only way to get a reasonable settlement sometimes is to start by asking for something unreasonable.

$8 a month now, I'm unemployed eventually they'll close the account since now I'm 27 cents under. because they took $8 out. (Regions)

This is the wall street holy grail wet dream

They want a small piece of every economic transaction .. A simple tax when we spend.

And the GOP and many dems are all too willing to to serve us up like beasts for slaughter.

We are so getting screwed, and we have a so called socialist liberal in the white house..

right now there are no fees charged to consumers when they use credit cards or debit cards for purchases. and there are no fees even being considered that I know of - nobody is talking about charging consumers to use their cards.

The bill was about the transaction fees that banks charge to businesses who accept payment by credit cards and debit cards. In Europe, which is a well-regulated market, the businesses pay about .5% of all purchases made with cards to the banks. In the US, the transactions fees have varied from 1% to 3%, after a $1 or $2 "swipe fee".

That is, if a store in Europe sells something for $100 and the customer pays by card, the bank transfers $99.50 to the merchant's account, keeping the $.50 as a fee for handling the transaction. For the same purchase in the US, the bank would keep $1.50 - $3.50 or so...which adds up to basically a continual windfall for the banking industry and a continual drain on retailers. The bill basically caps the fees in the US at about the same level as they are in Europe, which is very good.

Source: The Washington Post

The Federal Reserve raised its limit Wednesday on how much merchants must pay to banks each time a debit card is swiped, an eleventh-hour reprieve for the financial industry after a massive lobbying campaign.

The so-called swipe fee, or interchange, will increase from a maximum of 12 cents proposed by the Fed last year to a base charge of 21 cents. Banks can also collect .05 percent of the amount of the transaction to recoup losses from fraud. In addition, the Fed will consider allowing them to receive another cent for each transaction if they take steps to prevent fraud. The new rules will take effect Oct. 1.

Congress directed the Fed to craft the regulations as part of sweeping reforms of the financial system passed last year. But in voting on the rule, the Fed expressed its distaste for such a hands-on approach to the marketplace.

Members of the board of governors repeatedly referred to the 11,000 public comments received on the issue and the staff hours required to address it. Fed Governor Elizabeth Duke noted that the board was unable to take on other issues, such as protections for prepaid cards, while Chairman Ben S. Bernanke called the approach the “best available solution.”

Read more: http://www.washingtonpost.com/business/economy/banks-convince-fed-to-raise-swipe-fee-limit/2011/06/29/AGBD8PrH_story.html

http://dealbreaker.com/2009/12/david-teppers-lucky-charms/

So, David Tepper rubs his lucky balls at various intervals throughout the day. Okay, that’s fine. It’s actually better than fine, because it’s helped Appaloosa earn $7 billion in profits so far this year. Which brings us to this: they’re a brass replica of whose testicles? Obviously there are going to be some hedge fund managers out there reading this who’d like to break themselves off a piece of D.Tepp’s success this year. Those things were based on an original, and we’re going to need to know who they belonged to, asap.


Update: Apparently Mr. Receipt was our all-time favorite brass-balled hedge fund manager, the lucky and lovable D. Tepp, who apparently joked after the withdrawal that he “hadn’t used an ATM since Lehman.”




fucker

Never missed it a day.