Debit cards: $50 spending limit coming?

[justbroke]

The funny thing about the whole thing, and I think MSBKlawyer for the comic relief, is that this fee is paid for by the business taking your card! It is not a charge to you!!! I thought the new administration wanted to tax business more by making business pay more? (Okay, that's a stretch, but the consumer is not paying the $0.44 transaction fee that the business gets to pay as part of their "discount" rate.)

I did have one store that I shopped at that stopped taking debit/credit cards to pay for stamps. People would come in and buy one stamp ($0.44) and charge it. LOL... now I know that they were just "giving" away the stamps, it just makes me laugh that no one ever considered the consequence of "discount rates" and fees charges by credit card processors. This is how it pays for the payment card industry's infrastructure (computers, charge slips, and other swag for the retailers).

I was then thinking, based on MSBKlawyer's earlier analysis, that this was a ploy to get us to mail bills off again. That way, it will save the post office! The post office is losing money because of the payment card industry and electronic payments! Let's just make them mail everything. That just shifts the "revenue" from the banks to the U.S. Postal Service (USPS). A very shrewd move if you ask me!

Besides, this is all nonsense. Congress needs to watch where they play with bank fees. It will just come out somewhere else, and is just a shift in wealth from one company to another.

Hows that for political?

[ryan]

Dont know. But rest easy in the assurance that if you do somehow manage to get someone to process your debit card, that you won't be 'overcharged' for it. No sir, your government has but the kibosh on those evil, greedy credit card banks charging you 44 cents for the transaction! Now they can charge you only 12 cents! And if that prompts them to take their toys and go home, so what!! We didn't need their stinking debit cards anyway!! NYAAAAA!!! You can just buy a 99 cent money order and a 44 cent stamp and mail it to them to buy your plane ticket. That'll only cost you a $1.43! See how much money you'll be saving!!! And it will only take four days to get there. Who needs real-time / instant transaction processing anyway?

Forty four cents. Why, that's nearly nine nickles. How would the average working person scrape that up? Just who do these banks they think they are trying to make profits?

*Mood* = Sarcastic

Thanks, and may I say that was a brilliant and yet sarcastic post.

And to Justbroke: That's not crazy a notion that somewhere in Washington DC some USPS big shots are thinking, "yeh, we need to get people paying bills by mailing letters again - online card use is KILLING us!"

[helpme2010]

Something tells me this is purely about greed by the banks. I have a Chase debit card as I lost my credit cards when filing chapter 7. I am thinking Chase isn't getting the high transaction fees from my debit card vs. a normal credit card and/or they want us all to go back to credit cards so they can get us stuck on high monthly payments. A debit card to them means the money is paid right away instead of people running up monthly balances.

If they cut my debit card, I will take my bank account to another bank or credit union that will give me a debit card. Otherwise, what the heck are we supposed to do during an emergency situation, such as a car breaking down?

I have zero trust in banks or corporations

[chrisdfw]

I find it funny that the government needs to protect people from a 44 cent fee, while they take 44% or more of everything I make (state, local, federal, sales tax, property taxes, etc)

Reminds me when the government running a one trillion dollar deficit was lecturing the car executives for losing a few billion.

To me the customer and bank should be able to negotiate a fair fee without government interference, if they don't like the fee, don't accept the card or use the card. I like my debit card and have no problems with it. I don't need the government messing it up.

[Pandora]

I live on my debit card.... while I do have checks - I barely write more than 3 per month. I also think its a ploy to get people to use online banking via the banks in-house system as most banks charge a nominal fee to do so. I pay all but 3 bills online (separately, not thru bank system) which means that I'd have to divulge my checking account number vs. using my debit card number - something that I should have the option to do. Its my money, I paid for the checks & debit card usage, I maintain a balance to avoid fees...and I choose not to use credit cards - therefore I should have the option to use my checks/debit card as I wish.

Time to bring back the old coffee can in the cupboard methinks....

They want to talk about the economy getting worse - pass this stupid thing and watch what happens to ebay, Amazon, and every other online store/source that makes major money.

[helpme2010]

I find it funny that the government needs to protect people from a 44 cent fee, while they take 44% or more of everything I make (state, local, federal, sales tax, property taxes, etc)

Reminds me when the government running a one trillion dollar deficit was lecturing the car executives for losing a few billion.

To me the customer and bank should be able to negotiate a fair fee without government interference, if they don't like the fee, don't accept the card or use the card. I like my debit card and have no problems with it. I don't need the government messing it up.

I still find this entire article suspicious. If we are really talking about a 44 cent fee, then the credit card companies could work this out with the merchants, and even add some restrictions to the card usage by the credit card holder, including possible small fees or restrictions.

I think the credit card companies are simply looking for ways to scare the customers into paying money and not using their debit cards, but rather turning to credit cards for more profit to the banks.

If this really does move forward I am sure there will be alternatives provided such as pre-paid credit cards or deals to work with banks and credit unions to continue using debit cards.

But for us post-bk people, it does seem like the banks want to screw us yet again

[clevelandmom]

Cash is king. Always has been. Look at what happens when you try to buy a car or a house. It's much easier to make a deal if you have "cash" as opposed to putting it on credit or getting a loan. (I know, I know, who the heck has that kind of cash??)

That being said, I still write checks, and I refuse to use my debit cards for anything more than putting gas in my tank. Having cash on me FORCES me to not overspend. I have to seriously think about what I'm buying. The self-discipline is hard and it sucks, but when I just whip out the ol' plastic I don't care that I'm buying that extra magazine or that more expensive can of soup. I will NOT let these banks bully me. And that's all they are - bug fat a&& bullies filled with nothing but greed.

[WhatMoney]

The funny thing about the whole thing, and I thank MSBKlawyer for the comic relief, is that this fee is paid for by the business taking your card! It is not a charge to you!!! I thought the new administration wanted to tax business more by making business pay more? (Okay, that's a stretch, but the consumer is not paying the $0.44 transaction fee that the business gets to pay as part of their "discount" rate.)

Funny how the conservatives here fail to point out that the SAVINGS if this new law is enacted goes to the RETAILERS. The consumer is not paying the present $0.44 transaction fee, and will not pay the proposed $0.12 transaction fee. And if this regulation is not delayed then the retailers will have greater profits, and will NOT raise prices (no pass-thru costs if costs remain the same or decrease) - nor will they reduce their prices when their transaction costs are lowered.

The consumer will not be affected by this change. BS analysis by the conservatives here that this will cost the consumer more is not only wrong, but just entirely BS. I doubt the conservatives were engaging in comic relief. As usual they just don't understand the facts.

There are two opposing lobbies over this new proposed law - the large banks who want the law repealed, and the retailers, large and small business, who support the reduction in transaction costs. The initial reason for reducing the debit card transaction cost was to "bring it more in line with the actual transaction costs". The banks are screaming because another profit center, debit card transaction fees paid by the retailers, is going away. Why are the conservatives here on the banks' side? Oh, because they are Republicans? Because they are right-wing Libertarians? Makes no sense, but even when they have their facts wrong, they jump at any opportunity to attack the government. I'll bet this issue is being misrepresented on right-wing talk radio too - paid for by the large bank lobbies.

This law may be delayed or killed before it is enacted anyway. And the Republicans are having a problem deciding which lobby to support - the bank lobbies or the retail business lobbies. The banks or business - better get out that campaign contribution list to find out which way to vote, Senators.

As far as Chase's unconfirmed "threats" to reduce the debit card limit - it's all a political bluff to convince Congress to delay or kill the new rule. It will never happen. Other banks and credit unions are not as greedy as Chase and will happily offer you unrestricted debit cards. Anyone with a Chase account should ask themselves why they support these criminals in the first place. They don't want your business - so why are you still dealing with them?

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Senate Said to Be Nearing Bill to Delay ‘Swipe’ Fee Rules
March 08, 2011, 4:28 PM EST

March 8 (Bloomberg) -- A bipartisan group of U.S. senators is drafting legislation to delay debit-card “swipe” fee rules that banks say would cost them billions of dollars, according to two Senate aides with knowledge of the plan.

Senators Jon Tester of Montana and Tom Carper of Delaware, both Democrats, are working on the bill’s language with Senator Bob Corker, a Tennessee Republican, according to the two aides who requested anonymity because the talks aren’t public.

The Federal Reserve proposed capping debit-card interchange fees charged to merchants at 12 cents per transaction under a Dodd-Frank Act requirement to align them more closely with the processing costs. A bill to delay the measure, which may come this week, would be the first legislative attack on a rule that could cost lenders including Bank of America Corp. and JPMorgan Chase & Co. as much as $12 billion in annual revenue.

“There’s no question legislation is being looked at,” Corker said in an interview. “The question we’re dealing with now is, what’s the best way of approaching this issue?” The lawmakers discussed the shape of a bill on the Senate floor last night, Corker said.

Opponents of the rule have found supporters in Fed Chairman Ben S. Bernanke and Federal Deposit Insurance Corp. Chairman Sheila Bair, who questioned a provision exempting banks and credit unions with less than $10 billion in assets, saying it may have the unintended consequence of harming smaller lenders.

‘Unnecessarily Narrow’

The comments by Bernanke and Bair, and Acting Comptroller of the Currency John Walsh’s March 4 letter to the Fed calling the proposal “unnecessarily narrow,” bolster the case for a corrective bill, lawmakers said. At least seven senators who voted to include the swipe-fee provision in Dodd-Frank last year have filed comment letters raising concerns about the proposal.

If legislation is introduced, it would likely seek to change the timing of the rulemaking, which Dodd-Frank requires to be completed by April 21 and in effect by July 21. Bernanke said the Fed may miss the April 21 deadline.

Shares of San Francisco-based Visa Inc. and MasterCard Inc., which set the fees and pass the money to card-issuing banks, fell more than 10 percent after the Fed’s plan was released Dec. 16 amid investor concern that the caps will damage their business model.

Visa advanced 2 cents to $74.17 at 4 p.m. in New York Stock Exchange composite trading, reversing an earlier loss after news of the Senate talks was reported. MasterCard, based Purchase, New York, climbed 0.7 percent to $249.

Party Lines

The interchange-fee issue has cut across party lines, with Democrats squaring off with one another and Republicans in both chambers forced to pick between the largest retailers in their states or districts or the community banks and credit unions that have flooded Capitol Hill with calls and personal visits.

In the House, where lawmakers didn’t get a chance to vote on a stand-alone measure during last year’s financial-regulation debate, Republicans have seized on the idea of government- mandated price caps and members from both parties have focused on the small-lender exemption.

Representative Randy Neugebauer, a Texas Republican who leads a Financial Services subcommittee, said in an interview that House lawmakers are crafting a bill that would require a two-year delay and an economic analysis by federal regulators of the rule’s impact.

‘Bill of Goods’

House Financial Services Committee Chairman Spencer Bachus told credit union executives last week that they had been “sold a bill of goods, and that bill of goods was that interchange fees don’t apply to you.”

Still, Bachus said yesterday that the House leadership is waiting for the Democrat-controlled Senate to act before moving forward with their own legislation.

“Politically, this issue is really going to be a challenge,” Bachus, an Alabama Republican, said.

The financial-services industry has combined its lobbying clout in the effort to beat back the rule, forming a coalition that includes banks, credit unions and card networks. The groups have taken the fight to congressional offices and airwaves across the country, with the Electronic Payments Coalition, a group representing payment networks and card issuers, funding a television advertisement opposing the rule.

The Credit Union National Association and the Independent Community Bankers of America, Washington-based trade groups representing smaller lenders, have sent members to Capitol Hill to lobby for changes.

Retailers

Retailers, including Target Corp., Wal-Mart Stores Inc. and Home Depot Inc. have fought back with lobbying and ads of their own in support of the Fed proposal. Retail industry groups have organized a fly-in of more than 70 small-business owners this week to visit Capitol Hill to lobby against legislation.

Tester, who is up for re-election next year, has faced negative advertisements in his home state by retailers.

The Montana Democrat said that while he understands the issue “has some controversy to it,” changes to the provision will end up aiding some of the small businesses that are lobbying against him.

“If debit cards go away, it’s not going to help small businesses,” Tester said today in an interview.

Senator Richard Durbin, the Illinois Democrat who championed the swipe-fee provision, said retail-industry lobbying and his own outreach are starting to gain traction.

‘Getting Mobilized’

Retailers “have spent the last seven to 10 days really getting mobilized,” Durbin, the Senate’s second-ranking Democrat, said in an interview.

There is still a long road ahead before any changes can be made, Brian Gardner, an analyst with Keefe, Bruyette & Woods, said today in a note to clients.

“Our view remains unchanged despite some of the recent political noise -- we think it is unlikely that Congress will either delay the implementation of Durbin or change the substance,” wrote Gardner, a former House Republican aide.

Still, the tactics being used by small banks and credit unions are having an impact, said Durbin, who cited regular calls he’s receiving from colleagues registering concerns brought to them by local lenders.

The Fed hasn’t publicly requested more time to craft the rules, even though Bernanke and Fed Governor Sarah Bloom Raskin told lawmakers last month that the central bank would have trouble meeting the Dodd-Frank deadline.

Getting a rule approved by April 21 “is a question at this point,” Bernanke told lawmakers at a Senate hearing on March 2.


http://www.businessweek.com/news/201...fee-rules.html

[justbroke]

Funny how the conservatives here fail to point out that the SAVINGS if this new law is enacted goes to the RETAILERS.

I did try to point that out, but it is so convoluted, that as you point out... the retailers won't reduce their prices anyhow. I'm not sure if the net savings will result in additional jobs since the offset will be loss of jobs in the payment card industry (PCI).

Senators Jon Tester of Montana and Tom Carper of Delaware, both Democrats, are working on the bill’s language with Senator Bob Corker, a Tennessee Republican, according to the two aides who requested anonymity because the talks aren’t public.

I stopped reading as soon as the two sponsors were... no, not Democrats... from Delaware! Payment card capital of the World.

I can certainly agree, having consulted in the PCI, that a percentage of the total charge "might" be better, just like for credit card transactions. However, the Fed proposal looks at "ATM" network purchases to be at $0.12 per transaction where a credit card transaction gets a percentage (as low as 1.0% for high volume customers and certain transactions).

I also need to give an honorable mention to Home Depot. I don't think there is anything in that store that is under a dollar. LOL However, and again, the corner hardware store can be impacted.

It's tough to be a politician from either the state headquarters for Home Depot, Walmart or Target or the few states that host the major payment card industry players (Delaware, Nebraska, California, North Carolina and New York).

No matter how you slice it, it is going to hurt. If this reduction goes through, there go more jobs. I don't see this as a job creation package at all. But that's me. There is other backlash as well. Most government benefits are paid on a payment card (debit card). If these go away, federal and local governments will be hurt. Even Walmart pays many of their employees on debit cards. If the banks retaliate and get rid of them... oops!

This is way political and it would be interesting what happens with this.

[catleg]

This interchange fee debate has been about banks vs retailers for a long time now.
It's not PIN based interchange but signature based where the banks make all the money.
Debit treated like credit without the risk.
Funny how badly the banks are taking all this.
I'll be happy when people start using cash and currency.
Not a penny for tribute -- phrase often seen on Hard Times Tokens (look it up, from the time after Andrew Jackson refused to renew the charter of the Second (central) Bank of the United States.)

[locolady]

Sorry must be older than most people on here, but I had use cash to pay for most things up until around 1995. I guess some people on here never have done that but it cost you nothing to keep your on money and pretty sure it's accepted any where you go.
I had a small business and those fee add up and then you must make it up on the customer. Some one mention this will cost jobs, please tell me why? If the banks makes less on a automated transaction who exactly loses a jobs. I get tired of baseless speculation on important issue broken down simply by a political party affiliation.

[OhioFiler]

Sorry must be older than most people on here, but I had use cash to pay for most things up until around 1995. I guess some people on here never have done that but it cost you nothing to keep your on money and pretty sure it's accepted any where you go.
I had a small business and those fee add up and then you must make it up on the customer. Some one mention this will cost jobs, please tell me why? If the banks makes less on a automated transaction who exactly loses a jobs. I get tired of baseless speculation on important issue broken down simply by a political party affiliation.

Simple. Less revenue=less profit=need to cut expenses=cut empoyees.

[Freddy03]

I use my debit card often b/c I fear keeping more than $20 bucks on hand. If my purse gets stolen (which btw: 3 ladies had their purses ripped from their arms at my local target in the last 2 weeks) I can put a stop on the card and fight to get my money stolen back.

And I don't mind the nasty glares and huffy breaths I get when I whip out my check book every Sunday when I buy groceries. I still write checks - it's easier for me to keep track of spending that way.

[locolady]

There fore we need to give them money so that the banks can be profitable is your argument. I counter that bank are already making huge profits on there services and are unhappy with the new rule proposal. So they threaten that the sky will fall if they can't make X amount of dollars oh bo-hoh cry me a river. If they can't make a reasonable profit on those services then go out of business. Isn't that what you free market people are always saying, someone else will gladly step in to the market places.

[OhioFiler]

There fore we need to give them money so that the banks can be profitable is your argument. I counter that bank are already making huge profits on there services and are unhappy with the new rule proposal. So they threaten that the sky will fall if they can't make X amount of dollars oh bo-hoh cry me a river. If they can't make a reasonable profit on those services then go out of business. Isn't that what you free market people are always saying, someone else will gladly step in to the market places.

No one forces you to use a bank's services. Who is to determine what profit is acceptable or not acceptable? Some liberal bureaucrats in Washington? What is a reasonable profit in your estimation?