New Orleans The Dodd-Frank Financial Reform Act called for the Federal Reserve to put an end to the debit card surcharge padding when that retailers were paying to banks and credit card companies, usually amounting to 44 cents a transaction. New Fed proposals would cap the amounts at 7 to 14 cents, about an 80% reduction. Hooray!
But banks and card issuers are crying like babies at losing this opportunity to scam consumers on the swipe. Visa lost 10% of its value on the market yesterday. Bank of America and Wells Fargo record as much as 2.5% of their revenue from this scam, according to the Wall Street Journal.
I love this not only because it is a win for the biscuit cookers, but also given ACORN International’s Remittance Justice Campaign, this is another indication of what at least one authority – the United States Federal Reserve – believes is the actual cost-plus profit of such a transaction. With enough indirect data, eventually we will understand real costs, not just predatory pricing strategies.
This is also a boost for citizen wealth, if it turns out right:
“A $100 transaction today, for example, means merchants currently pay banks as much as $1.30 in debit interchange fees, according to figures provided by the Nilson Report. Under the proposals, the merchant would pay no more than 12 cents, said David Balto, a fellow with the left-leaning Center for American Progress.”
Hey, let’s have that buck back!
Here’s the head scratcher though, thirteen (13) United States Senators wrote a letter to Fed Chair Bernacke complaining that the card companies and banks were getting stiffed. I badly want to know who these 13 are, since their names probably comprise something that will be as close as we can come to a list of the Banking and Credit Senators or Anti-Consumer Senators, someone should come up with a better name. I have to admit to having been foiled even after a half-hour of searching since I was only able to come up with 7 of the 13 names, so anyone who knows speak up:
- Richard Shelby (R-AL) (Senate Banking Committee)
- Mark Warner (D-VA) (home state of Capital One!) (Senate Banking)
- Chris Coons (D-DE) (corporate registry state for many of these companies)
- Tom Carper (D-DE) (see above)
- David Vitter (R-LA) (WTF?)
- Judd Gregg (R-NH)
- Evan Bayh (D-IN) (looking for a goodbye present?)