
Congress Cuts Debit Fees In Rare Loss for Largest U.S. Banks - mahipal
http://www.nytimes.com/2010/05/15/business/15credit.html
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ams6110
For all the complaining that "small businesses" do about bank fees, I wonder
how many stop to think about how much extra volume those cards generate
(albeit at a smaller profit).

I'm old enough to remember the days when people had to carry cash or a
checkbook to pay for their retail purchases. I cannot see any way that impulse
purchases are not way up in the age of debit/credit card payments compared to
then. And online businesses certainly wouldn't be where it is today without
the existence of debit/credit transactions.

I'm not speaking from firsthand knowledge, but I think that for the lower
barrier to impulse buying, the reduced need to handle cash or worry about
bounced checks, that it might well be worth fees that "averaged 1.63 percent
of the transaction amount"

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lsc
obviously it's worth it to the merchant, or the businesses wouldn't be
accepting credit cards at all.

The problem is that there are two payment processors that matter, visa and
master card, and both charge quite a lot more than it costs to provide the
service.

Now, normally, this would just mean another competitor would come in with
lower prices. The problem here is first that the person who pays for the
service (the merchant) is not the person who decides what processing network
to use (that's the consumer, deciding which brand charge card to get. ) This
is further distorted because the fees that the payment processors charge are
partly given back to the issuing banks who then give some of that back to the
consumer.

so... as a merchant, either you pay exorbitant fees to a credit card
processor, and essentially give a discount to every one of your credit card
customers (but not your cash customers; the visa agreement states you can't
discount your product for not using visa) or you turn away the charge card
sales. That's what this law is trying to address.

~~~
sokoloff
AFAIK, the Visa agreement says that you can't charge more for using Visa. "3%
discount for cash" is very common still, common enough that Visa would be able
to find out about it and stop it if their agreement permitted it.

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ivankirigin
Note that consumer card rewards programS are paid by the merchant. Lowering
the fees is unambiguously a good thing. I wish regulations were such that caps
needn't be mandated, but barriers to innovative entrants are just so high.

I wish congress would regulate some minimum standards for merchant services.
That space is a total clusterfuck.

Regulation should either be wise or gtfo. This layer on top of unwise
regulations is unfortunate.

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devinj
I love that added incentive on top towards small banks: this only applies to
the biggest banks. It's a small, but clever, change.

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jaekwon
Dick Durbin speaks truth.

