Skip to comments.Dodd-Frank: The End Of Free Checking?
Posted on 09/29/2011 10:07:17 AM PDT by Slyscribe
On Sat., Oct. 1, new regulations from the Dodd-Frank financial overhaul go into effect on debit cards. Specifically, they impose price controls on interchange fees, the fees that banks and credit unions charge to retailers on debit card transactions.
The average interchange fee is about 44 cents. The new rules limit the fees to 21 to 24 cents.
The costs of processing debit card transactions doesnt go away because you limit the price, said John Berlau, director of the Center for Investors and Entrepreneurs at the libertarian Competitive Enterprise Institute. That shifts the costs to consumers.
(Excerpt) Read more at blogs.investors.com ...
I’ll just pull out all my money and stuff it in my mattress.
and most banks will follow.
A lot of businesses no longer accept personal checks.
looks like the banks are sitting in the cat-bird seat.
Only a fraction of the fee is the cost. It's mostly profit.
Not that I'm for these sort of controls, but he is being disingenuous.
$.44 for a debit transaction? Thats electronic?
Waiting for my bank to come up with something...and I won’t be happy about it. They are making money on the money I have to keep with them for “free checking”, lest they forget....
As a programmer that has coded these purchases, I can testify to that truth. If you have certain info - Name, address, card number, expiration and CID the fee is actually on the order of 3 cents.
I’ve worked in the Payment Card Industry (PCI).
Just as magazines and newspapers make money both from subscriptions AND ads, cards make money both on interest AND fees every time you use the card.
And debit card fees are much lower than credit card fees. That is, if you have a debit card with a VISA logo and use it as a debit card the store/business at which you are using the card is charged a fee significantly lower than if you use it as a credit card.
And this is why more and more companies are trying to default the customer to debit rather than credit. And why the banks are, in response, trying to jack up the debit fee.
The first impact will be that retailers will continue to benefit from customers using debit cards rather than credit cards. Beyond that, I dunno. The fee is basically profit, so it means some profits will be cut and they will have to look elsewhere for the money. But to place the onus of gaining more profits on the actual user (rather than the place where the card is used) exposes the banks to customer dissatisfaction. And the customer is free to change cards/banks. Short of overt anti-trust violations, banks can’t just decide to jack up customer fees without the risk of losing customers to banks that don’t.
I was a COBOL programmer for Security Pacific banks deposits and time deposits systems in the late 80’s and early 90’s before they were purchased by B of A.
I worked on the WaMu debit card conversion project six years ago (from VISA to MC) as a technical business analyst. And after that I worked at another large company on a PCI standards compliance project.
Yeah, I’ve dealt with it too. 8-D
It really depends on how you allocate costs. There are a lot of hidden overhead expenses you don’t see.
Someone has to pay for branches, data centers, networks, and all the employees who work there. At a large bank, there may be thousands of people working in retail services. Sure, they’re spread out of 40 million accounts, but there are considerable costs involved.
There’s a method to this madness. Make sure the average Joe out in South Succotash gets so spark-spittin angry at the banks that eventually he’ll get onboard with a government takeover, just as long as his Visa interest and ATM fees come down as a result.
Correct!!!!!, banks are not in business to run off customers.
What costs? Other than maintaining a computer database this is almost free money for the banks.