Service fee will be reduced significantly for retailers on debit card usage
By kingparker
@kingparker (9673)
United States
December 19, 2010 10:21am CST
As you know, the financial institutions or banks make huge profits from those transactions fee on credit card and debit cards from retailers. Now, the new federal law from Federal Reserve will announce soon enough, the fee on debit card transaction should be reduce 90%. That is a great news, because the retailers might give you a greater discount to encourage you to use debit cards or cash, instead of credit cards.
But the only concern here will be, the bank or financial institution might increase fee on somewhere else to regain this profit. What do you think of it?
2 responses
@xfahctor (14113)
• Lancaster, New Hampshire
19 Dec 10
There are a number of problems with this. First and foremost, is this: "the new federal law from Federal Reserve". By the constitution, the ONLY body that is allowed to create law is the congress. The federal reserve shouldn't not even exist to begin with (again, constitutional issues) but if they have to be there, they should not be creating law. This was one of my issues with T.A.R.P. was that it gave the federal reserve (an unconstitutional entity) unconstitutional powers.
Second issue. There are always unintended consequences when we start regulating too many things and this is no different. Although this may limit fees, it will have the effect of debit cards being accepted less. Much the same as limits on credit card fees are starting to limit credit card issuing. Credit card companies relied on fees to offset the risk they take when extending credit to people with less than stellar credit. The fees and interest offset the cost of doing business with people who default on their credit card payments.
@piyushbhatia1 (11695)
• India
11 Jul 20
That is the reason mobile payment system became so popular.
