Interchange Fees Forum

From: GoBankingRates.com

By Tim Chen

The unbanked are finally getting noticed: From Walmart and Target, to check cashing services and pawn shops, NetSpend and Green Dot to American Express, banks and non-banks alike are scrambling to attract these low-risk, highly lucrative potential customers. Even as rising checking account fees drive some out of the traditional banking system altogether, alternative financial services providers clamor for those that banks reject.

For banks, a perfect storm of low interest rates, cautious lending and regulatory changes rubbed most of the luster off of checking accounts. Usually, a bank can defray the cost of a checking account — estimated at more than $200 a year — by lending out the deposited funds and earning revenue off the interest spread.

But Regulation and Risk Management Will Remain the Big Drivers of IT Spending Decision-Making

 NEW YORK, NY, Feb 21, 2012 (MARKETWIRE via COMTEX) — Bankers increasingly see mobile technology as a must-have component of their retail offerings, but say that regulatory and risk-management concerns will dominate IT spending initiatives in 2012, according to a recent American Banker Research survey conducted in partnership with bank technology and payment systems specialists Tata Consultancy Services, TSYS, and Jack Henry and Associates.

From: U.S. News

From: Barron’s

There are expectations for action on debit and credit transactions.

Morgan Keegan

There are increasing expectations of a near-term regulatory action from the European Commission concerning Visa Europe Interchange rates for both debit and credit transactions.

This is a topic that has been brewing for some time, with the European Commission scrutinizing interchange rates on numerous occasions over the past 10 years. While the most recent comments from Joaquín Almunia (the European Commissioner responsible for competition) have only referred to Visa Europe, previous comments from the Commissioner indicate that both Visa Europe and MasterCard (ticker: MA) activities are likely under review.

From: The Washington Post

From: Wall Street Journal

by Robin Sidel

It isn’t every day an 11-branch bank in Iowa gets a financial leg up on J.P. Morgan Chase & Co., Wells Fargo & Co. and Citigroup Inc.

West Bank Inc. in West Des Moines is likely to collect more money than the nation’s biggest banks each time a customer uses a debit card. The reason: About 7,300 of the 7,436 U.S. banks are untouched by the Durbin amendment, part of the Dodd-Frank financial overhaul.

From: Credit Union Times

Editor’s Note:  Before European regulatory authorities enact new regulations setting price controls on interchange, they should learn from the US experience and recognize that: 1) price controls never protect consumers; and 2) a mandate that shifts card processing expenses from retailers to financial institutions will ultimately result in consumers picking up the tab.

From: Financial Times

By Alex Barker in Brussels

From: Supermarket News

WASHINGTON — Three industry associations, including Food Marketing Institute, filed a lawsuit in federal court here last week saying the Federal Reserve failed to follow the requirements of last year’s sweeping financial reforms when it set a cap on debit-card interchange fees this year.

Advertisement

“FMI’s members will suffer significant and irreparable monetary injury directly traceable to the Board’s misconstruction of the statute,” George Green, FMI general counsel, said in a statement. “The bottom line is that we are fighting back against a rule that ignores the clear language in the law and will put more money in the pockets of the big banks at the expense of retailers and their customers.”

From: Credit Union Times

This year saw a regulation capping the interchange card issuers were able to earn on a debit card transaction come into effect for the first time in history.

Passed and signed into law in 2010, the legislation mandating the cap, colloquially known for its chief sponsor, Sen. Richard Durbin (D-Ill.), had been included relatively late in the process of drafting the Dodd-Frank package of financial industry regulatory reforms. Controversial from the start, the amendment mandated that debit card issuers of more than $10 million in assets would have to live under the cap while those under $10 million, including all but three credit unions, would be exempt from the cap.