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Lenders To Take Big Hit On Debit Swipe Fee Caps

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Lenders to take big hit on debit swipe fee capsA proposed change to the Dodd-Frank Act states that debit card swipe fees can be limited to 12 cents per transaction, as opposed to as much as 2 and 5 percent of the purchase price, according to a report from Bloomberg News. The change could cost credit networks $38 billion a year, and may lead them to encourage consumers to use credit cards instead.

“It’s a lot more effective now to steer to debit,” Moshe Orenbuch, a Credit Suisse Group analyst, told the news service. “You’ve massively opened up that gap on larger-ticket purchases.”

This proposal is especially troublesome to American Express, which typically has the highest interchange fees in the industry, the report said. If consumers are steered away from credit cards by retailers, its profits could take a huge tumble.

Some believe that by eliminating these fees, retailers will bring down the price of some items if they’re purchased with debit. In the past, many businesses have said that these interchange fees cost even smaller companies tens of thousands a year.

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  • vikram

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