Measure to delay cap on debit card swipe fees defeated in Senate

[drebo]

Simply put, basic banking functions contribute to the economy. The economy can do more with the availability of capital basic banking provides.

The problem with that is that banks no longer need to rely on private investment to provide capital via loans. They can just get it from the gubment for virtually 0% interest and virtually risk free.

What incentive do banks have to treat their small-time, private investors (people like you and me who have a savings account) well? I mean, if the bank can borrow the government's money at 0% interest, why would they borrow mine at any more than that?

You want to make banks treat consumers better? Stop the government gravy train. Raise interest rates. Force banks to compete for investments, rather than giving them as much risk-free free money as they want.

 

[Doppel]

Right, I said 'basic banking functions', not everything banks do, to point out the difference between things that contribute to the economy - loaning money to businesses, and paying interest to depositors to 'share the wealth' from that business, raising money with stocks. The fees are an abuse, but a relatively minor part of the issues with our financial industry IMO. It's a lot easier for the 'free market' to work there where depositors have many choices of banks to use in a competitive market.

No, the public lacks lobbyists for its interests. The financial industry has lobbying, the war contractors have lobbying, the 'don't waste tax dollars' citizens don't.

That's the basic issue of corruption - the few who greatly profit from something have far more resources to invest in it than the many who benefit by not wasting money.

This is why I've considered we could really benefit from some sort of 'national PAC' that citizens give to to compete with the corrupt lobbying, but let's face it: impractical.

We're far more likely to be able to pass laws limiting lobbying, than to get the public to match it.

Government is SUPPOSED to represent the public against concentrated wealth - that's why everyone gets a vote.

But the concentrated interests have been really, really good at doing things like using right-wing social issues to get votes for their very anti-public agendas.

So a lot of Congressmen have a choice, support the corrupt interests and have money for their campaign, or lose to someone who will support those interests.

Pretty much all this. Lobbying is destroying this country from within, I think it is one of the most if not the most dire forces of evil affecting the concept of the government actually working for the majority of its people instead of the ultra wealthy minority who hire lobbyists.

This is more every year a plutocracy with "democratic theater", the process of the stupid majority masses being given a vote to make themselves think they are doing something. Whether they vote republican or democrat barely matters, both parties are on their knees for lobbyists to the same extent and represent the people with equal disdain. When you have the same entity donating to both parties you cannot conclude anything but that they are buying favor.

Unfortunately there isn't likely to be reform to stop this because the same who could enact that reform are in office and will remain in office because of corporate money that we're supposed to expect them to limit. Won't happen. The only way it will happen is if another corporate puppet gets into office and suddenly has a crisis of conscience and decides to fvck over everyone who gave money to him and start working for the rest of us.

 

[The-Noid]

The fees help pay for the consumer to actually have the account. Otherwise we are going to continue to see more of these no debit card accounts without $5,000 minimum, etc.

It is a tougher issue with unintended consequences and seemed to be added last second to Dodd-Frank without any real thought.

Overall, I think swipe fees going down would be a big boost to small business, however they are going to be the biggest benefactor. The lower end consumer will see a lower quality of service than under the full swipe fee program.

 

[Darwin333]

And since you do not pay less as a cash-paying consumer, because the prices are the same regardless, as that cash paying customer you are actually paying more than you otherwise should, in some regard literally paying a portion of those bank fees that the credit card users are putting to the merchant.

Credit cards have basically become a virus that the host cannot any longer live without and they are impossible to detach away.

The reason you do not pay less as a cash paying customer is because of the contract I must sign with the credit card companies. I am contractually obligated to NOT give a discount if you pay with cash.

I have no problem with private companies including such provisions in a contract as I can choose to sign it or choose to not do business with them, I am simply pointing out the reality of the situation. Most vendors despise the terms they must agree to in order to accept credit cards but its just about the only way a lot of people pay for things these days.

The entire reason for those self swipe machines you see almost everywhere is to try and prevent you from using your debit card as credit because the fees are much less.

The "same as cash" type loans are even worse on a vendor who actually pays the interest for you. I could literally give cash paying customers a 10%+ discount if I wasn't contractually obligated not to.

 

[Vette73]

The fees help pay for the consumer to actually have the account. Otherwise we are going to continue to see more of these no debit card accounts without $5,000 minimum, etc.

It is a tougher issue with unintended consequences and seemed to be added last second to Dodd-Frank without any real thought.

Overall, I think swipe fees going down would be a big boost to small business, however they are going to be the biggest benefactor. The lower end consumer will see a lower quality of service than under the full swipe fee program.

BS. They said the same thing about CCs and that did not happen.
There is little to no competition in CC fee area but there is a lot in accounts and differant Banks and Credit Unions.

Credit Card Reform Worked: Prices Not Increased, Just Clearer

http://consumerist.com/2011/06/credit-card-reform-worked-prices-clearer-not-increased.html

 

[Exterous]

Not just ourselves. There's a problem when I can put $100 in a savings account and have it wiped right out in a few months without making a single transaction.

If only there was some sort of requirement for them to list all the possible fees you could be hit with...

While lowering intercharge fees sounds like a slam dunk in theory, I bet you'll find that the banks recoup that lost income stream in other ways, such as monthly/annual fees to own a debit card. Reward programs for debit cards are also likely going away. The costs associated with debit card fraud (card reissuance, claims filings, etc) may also be now passed onto to the consumer since the lower cap on intercharge fees may not allow the banks to cover the costs associated with debit card fraud, which may get passed be enough for the banks to cover out of this revenue stream. In the end, I doubt the consumer will be much better off than before, and might even be worse off; break-even is probably best case scenario.

I agree. They will just find other ways to get your money - until congress passes more regulation for those fees and they move on to other areas

 

[The-Noid]

BS. They said the same thing about CCs and that did not happen.
There is little to no competition in CC fee area but there is a lot in accounts and differant Banks and Credit Unions.

Credit Card Reform Worked: Prices Not Increased, Just Clearer

http://consumerist.com/2011/06/credit-card-reform-worked-prices-clearer-not-increased.html

It already has happened.

Look at TCF Bank, US Bank, Wells Fargo. All $5,000 minimum which used to be $0 to maintain a checking account tied to a debit card.

Banks are doing one of four things.

1.) Have to have a loan or mortgage with them.
2.) Have to have $5,000+ (USBank is $25,000 on the small business side for example, to keep free checking) in the account.
3.) Have to have paperless statement delivery.
4.) Have to have payroll checks deposited directly with the bank.

All of these coincide with the loss of NSF fees and swipe fees. The business model of banking is somewhat broken but the overall experience for the low-end consumer is going to continue to deteriorate over and over given the Dodd-Frank bill. I in no way am going to argue for getting rid of the bill, just don't assume that with some of the arguably predatory practices in banking gone that the service quality will still be the same to the low-end consumer. It simply won't be.

Sorry to say facts aren't on your side and the issue of credit cards is not relevant here. Credit cards make money in interest. Debit cards make money in swipe fees and float. The two are not comparable.

 

[Vette73]

^

I have an account with debit card and no fees. There are piles of credit unions with no fee debit cards as well.

Again there is a lot of competition for bank accounts, but little to no competition in CC/Debit fees.

More FUD from banks like the BS they gave for regulations, Credit Cards, etc...

 

[rudder]

And that's how you eliminate fees. Oh, but please Government, save us from ourselves!!!

Except the credit card lobbyists have made it hard for stores to offer discounts for cash paying customers. So even if you pay in cash... you are still likely paying the same fees built into the cost of the item.

 

[The-Noid]

^

I have an account with debit card and no fees. There are piles of credit unions with no fee debit cards as well.

Again there is a lot of competition for bank accounts, but little to no competition in CC/Debit fees.

More FUD from banks like the BS they gave for regulations, Credit Cards, etc...

Credit unions have a different model as most pay for outside processing rather than doing it internally. It will be interesting to see what happens when processing prices go up because the bigger carriers aren't making the swipe fees. CU's only care about the float.

Credit unions have always been reactionary to what happens in the larger banking system via regulation etc. Wait 6-12 months and we will see what happens at CU's.

 

[ElFenix]

So even if you pay in cash... you are still likely paying the same fees built into the cost of the item.

yup

 

[lupi]

Never use a debit card as you have to input that stupid pin and they have less required protection than a standard credit card. Now a bill that lowers the max credit card transaction fee would be interesting.

 

[JS80]

Say goodbye to rewards checking

 

[JS80]

Except the credit card lobbyists have made it hard for stores to offer discounts for cash paying customers. So even if you pay in cash... you are still likely paying the same fees built into the cost of the item.

You get the discounts through points and rewards checking.

 

[sunzt]

You get the discounts through points and rewards checking.

Checking rewards/points are pretty bad deal from what I've seen. Rather just get a 1-2% rewards credit card. I only use CC so i hope these fees get lower so it can possibly lead to lower retail prices.

Having lower retail prices > having points rewards program on debit cards.

 

[piasabird]

In reality if you use a credit card the shop owner gets paid immediately. You never know if a check will clear at all.

 

[Craig234]

Except the credit card lobbyists have made it hard for stores to offer discounts for cash paying customers. So even if you pay in cash... you are still likely paying the same fees built into the cost of the item.

I haven't seen that be about lobbyists or government rules.

Credit card companies have provisions against cash discounts in their contracts.

 

[Vette73]

In reality if you use a credit card the shop owner gets paid immediately. You never know if a check will clear at all.

Checks are scanned now and treated like Debit/CC's. Either that or most places don't take them now.

 

[JS80]

Checking rewards/points are pretty bad deal from what I've seen. Rather just get a 1-2% rewards credit card. I only use CC so i hope these fees get lower so it can possibly lead to lower retail prices.

Having lower retail prices > having points rewards program on debit cards.

3% rewards checking is worth $750 in interest a year on a $25k balance. To get $750 in rewards, assuming 1.5% CC rewards, that's $50k in spending. You can double dip by using the 10 transaction requirement on rewards checking for small transactions and use CC for everything else. With this law the rewards checking disappears and you won't see meaningful price reductions at the retail level (if any).

 

[blackangst1]

Those same merchant fees. Keeps cost lower as Amex fees are lesser through what I'm sure is a nice arrangement.

Thats incorrect. Amex merchant fees are higher than Visa and Mastercard. Amex may have a special arrangement with Costco, but across the board their interchange fees are higher.

 

[The-Noid]

Thats incorrect. Amex merchant fees are higher than Visa and Mastercard. Amex may have a special arrangement with Costco, but across the board their interchange fees are higher.

Amex fees are in general higher however they are much more apt to offer special arrangements especially to higher end places, so they can use them for marketing materials.

In aggregate Amex you are looking at between 1 and 2.5% depending on transaction volume.

Visa/MC you are looking .5 to 1.5% + the per item fee.

Costco doesn't really fit their style, never understood that one.

 

[Vette73]

^

Costco is like a lose leader to them. It was large enough they really wanted it after losing SamsClub so they took less to get it and try to make it up on the back end, the user.

 

[cubby1223]

^

I have an account with debit card and no fees. There are piles of credit unions with no fee debit cards as well.

And credit unions get special perks from the government that banks do not get, altering their balance sheet. Your "no fee debit card" is paid for by John Q. Taxpayer. It's a complicated system that probably is broken in ways too large to count. But the absolute bottom line is, there are expenses involved in the operation of banks and credit unions which must be covered by those using the services. You CANNOT deny that statement. You can debate whether they overcharge, charge the wrong set of people, whatever, I don't care. But that statement is 100% true.

 

[Doppel]

I have no problem with private companies including such provisions in a contract as I can choose to sign it or choose to not do business with them

But you don't have an option. If you don't take plastic many of your customers will leave, so it's really a completely necessary cost of doing business.

Checking rewards/points are pretty bad deal from what I've seen. Rather just get a 1-2% rewards credit card.

Most rewards are crap in any case, but I get $.10 per debit purchase and I use my card all the time for drink purchases from a gas station (buck fifty or so). The bank even has a CC, which I don't own, that gives $.30 for all transactions regardless of size.

 

[sunzt]

3% rewards checking is worth $750 in interest a year on a $25k balance. To get $750 in rewards, assuming 1.5% CC rewards, that's $50k in spending. You can double dip by using the 10 transaction requirement on rewards checking for small transactions and use CC for everything else. With this law the rewards checking disappears and you won't see meaningful price reductions at the retail level (if any).

I'd rather have the good chance to have all of my retail purchases being lower than worry about a small segment of the population have a smaller rewards checking.