WASHINGTON -- On December 16 of last year, the Federal Reserve issued its proposed rule on debit-card interchange or "swipe" fees that would allow big banks to charge merchants no more than 12 cents per transaction. On Wednesday, June 29, the Fed will issue the final rule on the subject--and all eyes are watching to see whether the Fed will deviate from its original proposal, said UnfairCreditCardFees.com.
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Conventional wisdom is that [image-nocss] final rules generally will look like the proposed rules because it would be improper for the Fed to bow to pressure from the big banks, the group said.
The big banks have undertaken unprecedented levels of lobbying on the Hill and at the Federal Reserve, and thus the Fed's credibility as an independent agency fairly implementing the law would be at risk if the final rule substantially varied from the proposed rule, said the group.
The Fed was instructed to ensure that interchange fees were "reasonable and proportional" to issuers' costs and specific to processing an individual transaction--and its survey found that the actual cost to process a transaction rang in at four cents. The proposed rule increased that amount to allow either seven or 12 cents to be charged, leaving room for a still-significant profit margin.
A rule that allowed for even higher swipe fees would be an unjustified concession to big bank profits, and an affront to retailers and consumers, UnfairCreditCardFees.com said.
Merchants and consumers are anticipating that the Fed will stick to the letter of the law and its proposed rule when formulating the final rule. A rule that reflects these requirements means much-needed relief from excessive swipe fees and multi-billion dollar savings for small-business owners and their customers, added the group.
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