Credit and Debit Card Ratings

Retailers Celebrate Swipe Fee Ruling – Federal Reserve Caps Swipe Fees

By Shane Tripcony

It has been an issue of contention for a long time. The so-called swipe, or interchange, fees that retailers are charged every time a customer makes a purchase using a debit card have long been a boon for banks and the bane of retailers who have to pay them.

Most recently, thanks to the Dodd-Frank law that passed in 2010, the Federal Reserve put a cap on those fees at 21 cents per transaction. Although banks screamed that the cap would cost them billions in lost revenue – and force them to eliminate perks and awards programs – retailers were never overly thrilled with the ruling, either, arguing that the fee was still artificially high.

According to a report in Bloomberg, U.S. District Judge Richard Leon in Washington ruled on July 31 that the Federal Reserve considered information it shouldn’t have in arriving at its cap of 21 cents. Additionally, Bloomberg reporter Tom Schoenberg writes that Leon’s ruling determined that the Fed did not sufficiently foster competition among the card networks that levy the fees. “The board’s final rule not only fails to carry out Congress’s intention; it effectively countermands it!” wrote Leon in his ruling.

Although the current swipe fee cap will remain in effect, the ruling means that Fed regulators will have to go back to the drawing board and come up with either a new or an interim ruling. Not surprisingly, the reaction to the ruling was split, with retailers cheering the decision and banks claiming it will do harm to banks and their customers. “The price controls enacted as a result of the Durbin Amendment served one purpose – further lining the pockets of our nation’s big-box retailers at their own customers’ expense,” Bloomberg quoted Frank Keating, the president of the American Bankers Association as saying. “It was – and still is – all about trying to help retailers increase profit margins while providing no real benefit to consumers.” By contrast, the National Retail Federation released a statement saying that the “decision is the first step in setting these initial wrongs right and will ensure that swipe fee reform is done correctly.” Although nothing concrete has been announced yet, it’s unlikely that the ruling will not be appealed.

Category: Best Low Fee Prepaid Cards

Millions of people are turning to prepaid debit cards as a smart alternative to carrying cash and writing checks. Almost anyone can qualify and they don’t require a credit check or a bank account.

Though they carry credit card logos and can be used anywhere a credit card is used, unlike a credit card, they do not offer a line of credit. The user can only spend the amount that has been loaded onto the card or placed into the account associated with the card.

There are dozens of debit cards on the market, many of them issued by the same bank, but fee structures are vastly different. Bestprepaiddebitcards.com has done all the research for you and provides comprehensive reviews to help you decide which card is best for you.

GO2bank Offers Overdraft Protection up to $300.

And build your credit with the GO2bank Secured Visa® Credit Card with no annual fee*, no credit check*, and no impact to your credit when you apply. (sponsor link)

  • Retailers Celebrate Swipe Fee Ruling – Federal Reserve Caps Swipe Fees

    Retailers Celebrate Swipe Fee Ruling – Federal Reserve Caps Swipe Fees

    By Shane Tripcony

    It has been an issue of contention for a long time. The so-called swipe, or interchange, fees that retailers are charged every time a customer makes a purchase using a debit card have long been a boon for banks and the bane of retailers who have to pay them.

    Most recently, thanks to the Dodd-Frank law that passed in 2010, the Federal Reserve put a cap on those fees at 21 cents per transaction. Although banks screamed that the cap would cost them billions in lost revenue – and force them to eliminate perks and awards programs – retailers were never overly thrilled with the ruling, either, arguing that the fee was still artificially high.

    According to a report in Bloomberg, U.S. District Judge Richard Leon in Washington ruled on July 31 that the Federal Reserve considered information it shouldn’t have in arriving at its cap of 21 cents. Additionally, Bloomberg reporter Tom Schoenberg writes that Leon’s ruling determined that the Fed did not sufficiently foster competition among the card networks that levy the fees. “The board’s final rule not only fails to carry out Congress’s intention; it effectively countermands it!” wrote Leon in his ruling.

    Although the current swipe fee cap will remain in effect, the ruling means that Fed regulators will have to go back to the drawing board and come up with either a new or an interim ruling. Not surprisingly, the reaction to the ruling was split, with retailers cheering the decision and banks claiming it will do harm to banks and their customers. “The price controls enacted as a result of the Durbin Amendment served one purpose – further lining the pockets of our nation’s big-box retailers at their own customers’ expense,” Bloomberg quoted Frank Keating, the president of the American Bankers Association as saying. “It was – and still is – all about trying to help retailers increase profit margins while providing no real benefit to consumers.” By contrast, the National Retail Federation released a statement saying that the “decision is the first step in setting these initial wrongs right and will ensure that swipe fee reform is done correctly.” Although nothing concrete has been announced yet, it’s unlikely that the ruling will not be appealed.

  • The Occupy Movement Takes On Prepaid Cards

    The Occupy Movement Takes On Prepaid Cards

    The name says it all. When Occupy Wall Street became a household name a couple of years ago, the protesters were able to focus a light on the financial services industry and – at least in its view – the many harms it inflicts on the vast majority of citizens and the nation as a whole.

    While the Occupy movement was successful in raising awareness about the activities of big banks and other financial players, there has been plenty of criticism that it was lacking in concrete accomplishments. In at least one very specific way, that looks to be about to change. In July, it was announced that the Occupy Money Cooperative was being launched and that its first product would be a prepaid debit card.

    Recently, BestPrepaidDebitCards.com spoke via email with Carne Ross, a founding board member of The Occupy Cooperative, about the Occupy Card , why it chose to issue a prepaid debit card and how the group aims to change the financial services industry.

    BestPrepaidDebitCards.com : Why is Occupy’s first financial product a prepaid debit card? Is it because they have traditionally been such a bad deal for consumers? Or does it also have to do with the fact that this is a product that has a lot of potential?

    Ross: We chose a prepaid card as our first product because it’s one area where the unbanked and underbanked are exploited by current providers charging excessive and often hidden fees. We have also realized that this is a dynamic market and we believe that we can offer a competitive product in the long run, because our costs will be low. Moreover, the more users for the card, the lower the fees, as we will be able to negotiate better rates as we scale.

    BestPrepaidDebitCards.com: A breakdown of fees is important, even if it’s estimates. Just how drastically will the Occupy prepaid card differ from other prepaid cards? Besides fees, what other ways will the Occupy prepaid card be different from its rivals?

    Ross: I appreciate the questions but unfortunately I simply cannot even foreshadow the card’s fees and features at this point. We think it will be among the best deals on the market. Our aim is to minimize costs and pass these onto the consumer. We also think that the card will offer some good innovative features. Above all, if you use the card you become a member of the co-op that will offer the card, i.e. you become a co-owner of the company. You will have a stake and a say in how the co-op is run.

    BestPrepaidDebitCards.com: Do you have an estimated launch date for the Occupy Card?

    Ross: We do not. We hope soon. We are about to launch a campaign to crowd-source funding for initial operating expenses for the co-op. If successful – which we expect – we shall launch the card immediately. It’s ready to go. Until we launch the card, I’m not able to say much more, I’m afraid. We want to be super-transparent as a company, but some details we are required (legally) to withhold until the launch.

    BestPrepaidDebitCards.com: What sort of impact do you expect the card will have on banking in general?

    Ross: As we build up the number of users of the card, we shall soon be able to introduce further services that will shake up the current behemoths in the banking sector. These products will serve the same constituency as the card, wherever possible they will bolster the credit unions, provide low-cost choices, bypass the entrenched systems that rip everyone off, and brick-by- brick build alternatives for ordinary folk’s needs. I also should have been clearer in saying that because our costs are very low, we should be able to pass on any savings or benefits to our customer-members.

Credit and Debit Card Ratings