Interchange Fees Forum

From: Bloomberg

By Peter Eichenbaum and Joseph Galante – Jan 19, 2011

From: Credit Union Times

From: Credit Union Times

• By Claude R. Marx

Saying that the Federal Reserve’s proposed interchange rule could have “tragic consequences” for credit unions, their members and any debit card user, CUNA President/CEO Bill Cheney today asked the leaders of the House Financial Services Committee to hold hearings. 

Cheney noted that the amendment giving the Fed the power to regulate interchange was passed without any hearings having been held. He said CUNA’s objections center on the fact that there is “no assurance in the law or the proposal that any savings for merchants as a result of the government-set interchange fee caps and other provisions will be shared with consumers; however, the Board’s proposal ensures that interchange fees will be lower than the cost of providing payment services.  This means that credit unions and other issuers will have to find other ways to recover these losses.‘’

By Peter Schroeder – 12/30/10 03:55 PM ET

The number of lawmakers cautioning the Federal Reserve on its proposed rules limiting the fees banks can charge on debit cards continues to grow, as a bipartisan group of high-profile lawmakers fret over the rulemaking.

Thus far, 10 Republicans and eight Democrats have either warned the Fed to tread lightly on the interchange fee rules, or opposed them outright. That includes the two titular sponsors of Dodd-Frank, retiring Sen. Chris Dodd (D-Conn.) and Rep. Barney Frank (D-Mass.). Both have cautioned that unintended and overreaching consequences could result if rules are not carefully crafted by the central bank.

From: Digital Transactions

Dec. 30, 2010

The comments are flowing in to the Federal Reserve Board in the wake of the board’s controversial proposals to set a 12-cent cap on debit card interchange, ban exclusive network agreements on debit cards, and give merchants more freedom to direct the routing of debit transactions. To a large degree, the 35 comments posted to date on the Fed’s Web site reflect the run-up to the initial proposals the board revealed two weeks ago, with merchants strongly endorsing lower interchange and financial interests fiercely opposed (Digital Transactions News, Dec. 16).

December 21, 2010 marks the tenth anniversary of the Data Quality Act (DQA), also known as the Information Quality Act, 44 U.S.C § 3516, note.

The DQA has deep roots developed over nearly a half-century as the result of a seed planted during the Johnson Administration which germinated in the Nixon Administration, was watered by the Carter Administration and whose product was harvested by the Reagan Administration, made available to the public in the Bush I Administration and subsequently enhanced by the Clinton Administration and promoted by the Bush II and Obama Administrations. See: http://thecre.com/ombpapers/SystemsAnalysisGroup.htm and http://thecre.com/quality/20010924_fedinfotriangle.html

Source: Wall Street Journal

By Maya Jackson Randall

A bipartisan group of U.S. senators is urging the U.S. Federal Reserve to make sure that consumers aren’t hurt by new rules that would limit debit-card transaction fees.

In a recent letter to Federal Reserve Chairman Ben Bernanke, the senators said they fear that new rules on debit card “interchange” fees could replace market-based pricing with a government-controlled system.

They also expressed skepticism that interchange fee limits will benefit consumers. Price-fixing hurts consumers, they said.

WASHINGTON (Reuters) – The Federal Reserve is expected to unveil a proposed rule next week that would limit the transaction fees that banks can charge retailers when a customer uses a debit card, according to two industry sources familiar with the matter.

The rule, mandated by the Dodd-Frank financial reform law enacted in July, is expected to be on the agenda for a December 16 board meeting, according to the sources. Federal Reserve officials have only said publicly that a rule is expected soon.

Banks are eager to learn the details of the proposed rules, which will give them a better idea of how much it will cut into their profits.

Lauren Tara LaCapra

NEW YORK (TheStreet) — It may be surprising to learn that while big banks brace for the impact of a rule limiting fees on debit-card purchases, the companies that process those transactions aren’t worried much at all.

The so-called Durbin amendment is targeting the fees banks charge merchants for accepting those payments. The change stands to clothesline profits at large consumer banks by $4.5 billion to $5 billion a year, according to an S&P report. Bank of America(BAC) alone has outlined a $22 billion goodwill writedown and $5 billion in lost revenue per year, while another smaller lender, TCF Financial(TCB) is suing the federal government to prevent the law from being implemented.

MyBankTracker.com

The government mandates meant to protect consumers from the giants of the banking industry might end up costing everyday banking customers.

Chase expects to begin phasing out its debit card rewards programs next February, according to Charlie Scharf, JPMorgan Chase’s chief executive of retail financial services, who spoke at the BancAnalysts Association of Boston Conference earlier this month.

The consensus at the conference was that the Federal Reserve would issue new debit card interchange fee rules sometime in the next few weeks, according to US Banker. The new rules would come as part of the Durbin Amendment to the financial reform act passed earlier this year.