A 12 Cent Credit Card Fee?

From the Houston Chronicle

A proposed cap on the fees that banks charge for debit card transactions would substantially reduce the cost for businesses. But it’s started a death watch for debit card rewards and renewed predictions that free checking is done for.

At issue is who will ultimately benefit from the savings? The Federal Reserve’s proposal to cap these fees, officially known as interchange fees, at 12 cents per transaction would enable retailers to pass on annual savings of $10 billion to $13 billion to consumers. But banks and card networks maintain that retailers will pocket the savings. This would leave consumers to bear the brunt of the new law through higher costs for banking and reduced rewards programs.

In releasing its proposal Thursday, Fed staff members said they found the cost to banks for processing is between 7 cents and 12 cents per transaction. Yet every time a customer swipes a debit card, the average fee is 44 cents.

The banks are making out like bandits and then telling us it’s for our benefit. I always worry when someone says they are doing something for my own good. I can’t help but feel that someone is going to hit me.

Banks love to bill as if some dedicated employee was carefulling examining the transaction, which was undoubtedly true in 1947. The actual current circumstances is a high speed computer instantly calculating the transaction.

We can adjust for the times.

James Pilant