House Financial Services Chairman Rep. Barney Frank (D-MA) told CNBC on Friday that card companies would have difficulty covering the total cost of debit transactions under the Federal Reserve’s preliminary plan for interchange fee regulation.
The Federal Reserve, assigned under the Durbin Amendment with setting debit card interchange fees, offered Thursday two suggestions both with a limit of 12 cents per transaction for signature and PIN. (Related Article: Debit Card Interchange Fees Plummet Under Fed’s Proposed Rules)
The Durbin Amendment is part of the massive financial regulatory bill, known as the Dodd-Frank Act, which was passed in July. Frank is considered one of the lead authors of the bill, along with Senate Banking Committee Chairman Christopher Dodd (D-CT).
“I think the way it was written, the amount the credit card companies are allowed to charge is too low,” said Frank told CNBC. “It does not reflect the full cost of all that you have to do if you are running a credit card operation.”
Frank said he fears that any savings under the new proposal would not translate into benefits for consumers. He also expressed concern that small banks, despite their exempt status, will still be negatively impacted by the new debit swipe fee limit.
The debit interchange regulation was tacked onto the legislation at the Senate’s request, according to Frank, who said he wished the measure had been omitted. (Read More)
PYMNTS.com hosted an exclusive live webinar Friday during which top economic and legal experts on the Durbin Amendment analyzed what the Fed’s initial debit proposal could mean for the payments industry.
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