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Comment by diebeforei485 | Hacker News Reader

This is bad. Low debit card fees make low-income people unbankable.

https://kunle.app/feb-2022-children-of-durbin.html

They might make the gigantic too-big-to-fail banks want to turn away from lower-profit customers but credit unions are absolutely a thing. In my area, several credit unions offer payment accounts--with debit cards and without a monthly fee--for people who have had accounts closed due to overdraft or who have an ITIN instead of a SSN.

I'm not really moved by "if we don't let the TBTF banks charge whatever they want, they might not like us". We have not-for-profit institutions and community-focused banks for a reason. At bottom, we should introduce postal banking like a lot of over countries to get ourselves out of this reliance on those banks.

EU has a cap on card fees, and low-income people have no problem opening bank accounts. They do get totally shafted on overdraft fees tho.

It's not about opening accounts, it's about monthly fees. If banks can't make money from debit card transactions they'll have to charge account holders directly.

That sounds more like you need to give poor people more money. Not even that much, just a little.

Not that you need to fight caps on card fees.

In the UK, bank accounts rarely cost anything and debit cards come for free as standard. Banks are still profitable.

I would hazard a guess that most banks in fact make most of their money through lending your funds to other people.

I know this is highly EU-country dependent, but paying monthly fees for banking in USA is incredibly easy to avoid, but harder to avoid in EU.

Could say the rich subsidize the poor in USA (by keeping more in 0.0001% interest checking accounts and more card swipes per month).

That article itself points out why it doesn't necessarily apply today:

> Banks make money off consumers by a mix of payment revenue (typically interchange, wire fees etc), net interest margin (the spread between what banks earn lending money and what they pay as interest on your checking and savings accounts) and other fees (monthly fees, dormant account fees, overdraft fees etc). Over the last 2 decades, as interest rates have hovered at all time lows, the mix of revenue from depository consumer banking has shifted heavily to payment & fee based revenue, and less on net interest margin. In addition, if you were a bank customer that lived paycheck to paycheck (or otherwise had high income and expense volatility) then your bank couldn’t rely on net interest margin to monetize you anyway, and relied much more heavily on fees.

Interest rates are no longer at an all time low, so the shift in how banks make money is already underway. The article also mentions high infrastructure costs for banks ($36/year/account), but many banks (and especially credit unions) have had massive migrations over the last five years on to newer infrastructure.

If anything, this article makes it clear to me that there are a lot of systems in place here beyond just the interchange fee.

Paycheck to paycheck customers have low bank balances, so the interest rate doesn't matter because there's no principal. The banks could have them as customers because of debit card fees paying the costs. But they became unprofitable overnight when the Durbin amendment went into effect, which is why banks started to implement monthly fees (in addition to overdraft fees etc).

Yes, credit unions and neobanks can charge higher swipe fees so they can bank them. But under this new proposal, maybe not anymore.

Debit cards don't involve any debt. There's no reason lower fees would stop them from being able to get accounts, although some banks may protest.

The article the commenter linked is almost entirely about debit cards. The bank has to make money somehow to pay for things like fraud and auditing.

Make money on savings interest and mortgages?

which poor people don't have

There are plenty of ways for banks to make money off poor people. Some banks might defect, but the banking market is competitive, others will step in.

In the EU, debit cards (with EU-capped interchange, and no debt mechanism) are the majority, and there's nothing that points toward that limiting low-income populations' access to banking or card networks.

Can't speak here for entire EU, only France, but opening a bank account or getting a basic debit card requires no minimum proof of income, and typically have no fees associated. No financial barrier to entry for any population segment.

Your link literally claims that small community banks have lobbys strong enough to escape the regulation, as if big banks had less lobbying power. Honestly it's not that often to see a blog post discrediting itself so quickly…

Also, since the interest rate has risen a lot since then, the main argument in it simply disappeared.

such a bad take

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