Credit and Debit Card Ratings

Retailers Lose In Latest Debit Card Swipe Fee Ruling

Few consumers know that there is a heated battle going on about the fees charged every time you swipe your debit card. It’s a conflict between big banks and large retailers, two politically influential and well-moneyed groups, about the current cap on debit card swipe fees. The latest round of this years-long battle was a victory for the banks.

On March 21 the US Appeals Court for the District of Columbia overturned a lower court’s July decision that ordered the Federal Reserve to recalculate and lower its 21-cent per transaction cap on the fees charged for processing a debit card payment. Retailers cheered that decision and expressed optimism that the so-called debit card swipe fee would be reduced to as low as 12 cents. This latest ruling means that the swipe fee cap will remain at 21 cents per transaction.

The imbroglio over how much banks should be able to charge stores for processing a debit card purchase began after the 2010 passage of the Dodd-Frank Consumer Protection and Wall Street Reform Act. Under the Durbin Amendment of that legislation, the Federal Reserve was tasked with formulating regulations that would result in swipe fees that reflected the actual costs to banks of processing a payment. Initially, the Federal Reserve proposed a cap of 12 cents, though it later revised it upwards to 21 cents. Before the passage of the Durbin Amendment and the Federal Reserve’s calculations the average debit card swipe fee was about 45 cents.

Seeking to lower the cap even more, the National Retail Federation (NRF) and other groups filed an appeal in federal court in 2011, which eventually resulted in last summer’s ruling. Naturally, the NRF was disappointed in the court’s latest ruling. “The Fed ignored congressional intent and worked to shield debit card companies and big banks. A self-described victory for the banks usually results in higher costs for consumers,” says Mallory Duncan, NRF’s senior vice president and general counsel. NRF and its allies are considering whether to appeal this latest ruling.

By contrast, the American Bankers Association applauded the ruling but remained critical of the establishment of a swipe fee cap in the first place. “While this decision is a welcomed outcome, the fact remains that the underlying policy – the Durbin Amendment – has not accomplished its goal of lowering prices for consumers. It has only served to increase the bottom line for big box retailers,” says ABA president Frank Keating. This is a battle that seems likely to continue.

Prepaid Debit Card Fees Lower Than Checking Account Charges

A recent report by Bretton Woods, Inc. shows that most consumers using prepaid debit cards to manage finances do so for less than $7.50 per month. by Chris Warren It has long been an assumption that users of prepaid debit cards turn to them as something of a last resort. But a …

 

 

 

 

 

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  • Retailers Lose In Latest Debit Card Swipe Fee Ruling

    Retailers Lose In Latest Debit Card Swipe Fee Ruling

    Few consumers know that there is a heated battle going on about the fees charged every time you swipe your debit card. It’s a conflict between big banks and large retailers, two politically influential and well-moneyed groups, about the current cap on debit card swipe fees. The latest round of this years-long battle was a victory for the banks.

    On March 21 the US Appeals Court for the District of Columbia overturned a lower court’s July decision that ordered the Federal Reserve to recalculate and lower its 21-cent per transaction cap on the fees charged for processing a debit card payment. Retailers cheered that decision and expressed optimism that the so-called debit card swipe fee would be reduced to as low as 12 cents. This latest ruling means that the swipe fee cap will remain at 21 cents per transaction.

    The imbroglio over how much banks should be able to charge stores for processing a debit card purchase began after the 2010 passage of the Dodd-Frank Consumer Protection and Wall Street Reform Act. Under the Durbin Amendment of that legislation, the Federal Reserve was tasked with formulating regulations that would result in swipe fees that reflected the actual costs to banks of processing a payment. Initially, the Federal Reserve proposed a cap of 12 cents, though it later revised it upwards to 21 cents. Before the passage of the Durbin Amendment and the Federal Reserve’s calculations the average debit card swipe fee was about 45 cents.

    Seeking to lower the cap even more, the National Retail Federation (NRF) and other groups filed an appeal in federal court in 2011, which eventually resulted in last summer’s ruling. Naturally, the NRF was disappointed in the court’s latest ruling. “The Fed ignored congressional intent and worked to shield debit card companies and big banks. A self-described victory for the banks usually results in higher costs for consumers,” says Mallory Duncan, NRF’s senior vice president and general counsel. NRF and its allies are considering whether to appeal this latest ruling.

    By contrast, the American Bankers Association applauded the ruling but remained critical of the establishment of a swipe fee cap in the first place. “While this decision is a welcomed outcome, the fact remains that the underlying policy – the Durbin Amendment – has not accomplished its goal of lowering prices for consumers. It has only served to increase the bottom line for big box retailers,” says ABA president Frank Keating. This is a battle that seems likely to continue.

    Prepaid Debit Card Fees Lower Than Checking Account Charges

    A recent report by Bretton Woods, Inc. shows that most consumers using prepaid debit cards to manage finances do so for less than $7.50 per month. by Chris Warren It has long been an assumption that users of prepaid debit cards turn to them as something of a last resort. But a …

     

     

     

     

     

  • American Express Announces Financial Inclusion Efforts at SXSW 2014

    American Express Announces Financial Inclusion Efforts at SXSW 2014

    The annual South by Southwest Festival (SXSW) in Austin, Texas has earned a global reputation as a place where talented bands and filmmakers go to do something special. Now it’s American Express’s turn to go big. At this year’s SXSW Interactive Festival, the technology arm of the sprawling event, American Express unveiled several major initiatives to both shine a spotlight on the needs of the tens of millions of Americans who are not well-served by the current financial system and to do something about it.

    Appropriately enough, American Express chose SXSW as the place to show a trailer to a movie it is helping produce. The film, Spent: Looking for Change, premiering this summer, is a documentary that tells the stories of ordinary Americans who are frozen out of the traditional financial system. Forced to rely on expensive options like payday loans and money orders, the movie shows how time-consuming and costly it is for an estimated 70 million Americans to move money around and pay bills, tasks that people with bank and credit card accounts take for granted. “Not having a bank account makes it incredibly difficult to manage your day to day finances, it often means you can’t establish credit, and therefore can’t buy a home, finance a car, or take out a student loan,” says Davis Guggenheim, the executive creative director and the filmmaker behind An Inconvenient Truth and Waiting for Superman.

    While the film is meant to raise awareness for the problems faced by Americans not served by the mainstream financial services industry, American Express’s other announcements at SXSW are meant to find solutions. One of the company’s new efforts will be to devote funding to technology startups focused on improving the options available to the financially disenfranchised. Specifically, American Express Ventures, a Silicon Valley effort targeted at finding technology innovation in financial services, will seek out technology startups that provide people greater access to capital, promote savings and develop new credit building models.

    In addition, American Express announced the establishment of a Financial Innovation Lab. Set to begin work this June, the lab will give researchers, technologists and professionals working with the underserved an opportunity to work together and share ideas and solutions.  “We want to help modernize traditional banking and advance the next generation of products. By supporting new technology as well as the work of researchers and promising startups, I believe we can bring more people from the margins to the mainstream,” says Dan Schulman, group president of Enterprise Growth at American Express.

    There’s also plenty of self-interest in American Express’s announcements at SXSW. The company has released low-fee prepaid debit card products, Serve and Bluebird, over the past few years and has made no secret of its efforts to grow its business by meeting the needs of America’s unbanked and under banked.

    To view the trailer and to find out more about American Express’ commitment to improving financial inclusion visit: www.spentmovie.com.

    For more information, check out the video below.  This this great video by Dan Schulman of Amex as he discusses the issue of financial inclusion is quite an eye opener. the trailer link and the video below.

    After watching the trailer and the video, share your thoughts in the Comments section below.  We would love to hear from you.  Also, please help spread the word.  Tweet, Like, Share.  It is information worth sharing.

Credit and Debit Card Ratings