Businesses Set to Benefit from Debit Card Proposal

A proposed limit on fees charged for debit card transactions could save businesses substantially on their POS debit card expenses. The cost to banks for processing the cards is a mere 7 - 12 cents, but they charge on average 44 cents. The Fed proposes a 12-cent cap, which should result in substantial savings for merchants. Not surprisingly, the banks and their card networks are throwing cold water on any contemplated end of their gravy train.

Senator Richard Durbin (Illinois - D), a supporter of the proposal, says,

"These credit-card giants and banks are imposing fees that are in no relation to the actual cost of processing, and the retailers and merchants have no way to bargain or even resist these increases.  . . . This new law brings the Federal Reserve into the picture and changes that dynamic.”

Incoming Financial Services Committee Chairman Spencer Bachus (Alabama - R) states that the Fed is moving too fast on the proposal and is urging a slower approach.