My employer is apoplectic over the so-called "Durbin Rule" that passed as part of Chris Dodd's banking legislation. But when I try to talk to normal folks about it, their eyes glaze over. So, I was thrilled to see that BusinessWeek has up the first really good summary of the issue, and why the average American should care.
Framing brawls about money as essentially consumer issues is a time-honored tactic in Washington. However, the debit-card fee issue is primarily a conflict between big business and big banks. Up for grabs is $16 billion in annual revenues. That's the amount merchants collect—at an average of 44 cents per debit-card swipe—and turn over to banks. Retailers have been complaining for years about the hefty fees. The fight is reaching a crescendo as an April deadline nears for the Fed to decide what is a "reasonable" fee, as required under last year's Dodd-Frank financial regulation law. "This is a battle between the large retailers and the large banks," says Clifford Rossi, executive-in-residence at the University of Maryland's Center for Financial Policy, who has done financial industry-sponsored research on swipe fees. "The voice lost in the shuffle is the consumer's."Here's the bottom line:
1. If the new 12-cent cap on Debit Card transactions is enacted, you may see cheaper prices at retailers. BUT you will lose free checking, rewards programs, and possibly free debit cards altogether.
2. If the new 12-cent cap on Debit Card transactions is NOT enacted, you may see prices rise at retailers. BUT you may also see them starting to refuse to accept Debit Cards from some providers.
Either way, your life just got a lot more complicated in the name of "consumer friendliness".