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05/08/2010 -
Last month, the U.S. federal government passed legislation regulating fees merchants incur when customers pay at credit card machines. However, now some states are turning their attention to debit cards.California State Senator Jenny Oropeza has introduced a bill that would prohibit merchants from charging additional fees when customers pay with a debit card, the San Francisco Chronicle reports. The Senate approved the measure 22-9 last month and is set to be discussed by the full assembly within the next week.
The bill would ban debit transaction fees, generally between 45 cents and $1, which make transactions prices higher than advertised. Oropeza claims that this practice affects some of the area’s most vulnerable citizens whose government assistance is often paid with debit cards.
However, some card companies such as Visa, do not allow merchants to charge debit fees, yet some do anyway. One small business owner, Majid Ghanadan. told the paper that banning the fee would have disastrous effects on her business. "If customers don't pay the fee, that is going to put us out of business, or I will have to fire a couple more of my employees and work 24 hours a day," she said.
The Durbin Amendment in the recent financial reform bill gave the Federal Reserve the authority to establish reasonable standards for interchange fees that retailers incur each time a customer pays with a credit card, although that rate has not yet been decided.
