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10/09/2010 -
As the Federal Reserve begins developing new rules to govern debit card fees stipulated by federal legislation, merchants who accept Visa and MasterCard are wondering how it will affect card issuers.Visa and MasterCard, the two largest payment issuers, are concerned that new regulations will cut profits, the Associated Press writes. The provision hopes to save retailers billions of dollars in processing fees, which are usually between 1 and 2 percent of a debit card transaction. This money then goes to banks and credit card networks.
According to Citi analyst Donald Fandetti, the central bank is still in "fact-finding mode," and is expected to begin receiving proposals in November, followed by a 90-day comment period.
Credit card companies should expect to see the final proposal fall within a 60 to 80 percent reduction in debit revenue - the worst-case scenario for banks and payment companies, according to the Associated Press.
Earlier this week, the Federal Reserve turned to executives from the Credit Union National Association and the National Association of Federal Credit Unions to for help. They asked the two groups for guidance in determining how much debit programs really cost.
