I just wrote about debit card fees a couple weeks back, and my timing couldn’t have been better, although the Times always manages to produce a better chart.
This past week the New York Times reported Debit Fee Cut Is Rare Loss for Largest U.S. Banks. The article didn’t specify the exact changes that were voted on, as with any new regulations, they tend to run 1000 pages and be buried in fine print. As I discussed, and you can see above, debit card fees, while slightly lower than credit, are still based on the value of the purchase (thus my article’s catchy title “Ad Velorem Debit Card Fees”) while the true cost doesn’t change.
Beware, however, the unintended consequences of this set of regulations. Regardless of the savings the business and customer will enjoy, the card issuer will seek to make up that revenue. However they do it, it will come out of our pockets.
Currently, debit/credit card issuers have their own rule that merchants are not permitted to enforce a minimum purchase to use the card, e.g. “$10 minimum for charge purchases.” While I agree it can be convenient, it’s a burden to the store to process a charge for much under $5. The regulation will permit stores to set a minimum.
Let’s see how this story plays out. What do think of it so far? Will it help? Will it cost you?
Joe
What interesting timing. I was just talking about these fees yesterday.
“Currently, debit/credit card issuers have their own rule that merchants are not permitted to enforce a minimum purchase to use the card, e.g. “$10 minimum for charge purchases.â€
I wonder if the credit companies enforce this. I still know of stores that do this.
I think this is one case where the new regulation will help, the card issuers shouldn’t have been allowed to strong-arm merchants into a losing transaction. In larger stores, I pull out the card, in a mom & pop shop, I’ll only charge an over $10 one, sign or not.
I agree. It does suck that smaller merchants lose a huge percentage of their marginal profits. The only caveat is that I seldom have cash on me (use my check card), so if they are unwilling to deal, they often will lose my purchase altogether. I just included this post in my weekly round up.