http://www.nytimes.com/2011/03/08/business/08debit.html?_r=1&ref=business
The second of today's double-feature, and it's an all out war.
The Federal Reserve recently passed an amendment that lowers the "swipe fee" that banks get from retailers every time a debit transaction occurs. The proposed cut will make the transaction 12 cents per transaction from an average of 44 cents. Many banks claim they will be "unable to afford to issue debit cards to customers or will force them to raise other consumer banking charges to cover the costs.
They also claim retailers will reap unfair profits." Retailers paid about $20.5 billion last year in transaction fees. "Banks and credit card companies contend that the fee cap will create a windfall for giant retailers like Home Depot and Wal-Mart, which they say generate the bulk of debit card transactions, while doing little for small retailers."
Lots of finger-pointing and howling going on about this one, who does this help and who does this hurt in your opinion? Other comments?
44 cents all the way down to 12 is huge. That's about 73%. Does this mean the retail stores will be getting the 32 cents the banks are losing? Or is it going somewhere else. This will definitely have an impact on banks. Especially when you think about how many millions of transactions are made on a daily basis. I think the "lower swipe" fee will also help out the bigger retailers as Terrence's post said.
ReplyDeleteI'm also confused as to where this 32 cents will be going, that's a huge difference. Clearly this is going to have a huge impact on all banks. I would say just about every American uses their debt card at some retail store at least a times a week, the loss in these transactions is incredible. Clearly this will also help giant retailers, creating yet another monopolistic aspect for these retailers. Does Wal-Mart ever lose?
ReplyDeletehaha agreed, this is a huge cut and the majority of the benefits will surely go to those who do not need them. What help does lowering the swipe fee in-tale anyway? Is this supposed to increase consumption or are we just looking out for big business again? I'm sure the events that follow will not be too hopeful for the average American
ReplyDeleteAre they serious? I'm sure if the Fed raised the fee, it would be fine with them. I dont feel bad for any of them. Does anyone really think that Chase-Manhattan, or Capital One Bank is going anywhere? If you can afford to sponsor every college football halftime show on the planet, then you are probably doing ok. You might only get a 2 million dollar bonus this year. Sorry for your luck
ReplyDeleteThat is quite ridiculous that these huge retailers will be making even more profits due to transaction fees of upwards of $20.5 billion. I agree with Matt, Wal-mart can't lose. I am curious as to where this money will be going, and why did they decide on 12 cents? They must have calculated the exact amount they needed and it came out to 12 cents per, so that is how they settled on this price. These companies are out of luck, it seems like that is a common phrase as of late.
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