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09/12/2010 -
The Dodd-Frank financial reform law includes a stipulation that requires a cap on the payment processing transaction fees that banks charge retailers when customers make purchases with debit cards.Next week, the Federal Reserve is expected to release a proposed rule, ABC News reports. If the board votes to go forward with the rule, a public comment period will commence after which the final rule will be voted on.
Both banks and merchants are waiting to learn what the new rule will entail, with banks hoping that it won't severely cut into their profits and merchants pushing for the savings the fees will entail for their businesses.
Debit card fees cost retailers an estimated 1 to 2 percent of every transaction, totaling $20 billion annually, according to the National Retail Federation.
"Network fees are the fees collected by players such as MasterCard and Visa," Ramsey El-Assal, associate director at UBS Investment Research, told Bloomberg News. "The regulation of network fees was not in the original Durbin amendment language."
Credit card processing fees will not be affected by the new rule.
