Congress Cuts Debit Fees In Rare Loss for Largest U.S. Banks
nytimes.com
nytimes.com
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"
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.
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.