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22/06/2010 -
Merchants may be get a break - consumers, too - as U.S. banks are set to cut credit card processing fees.The House and Senate announced Monday an agreement that will allow the Federal Reserve to regulate debit card fees paid by US merchants, The Wall Street Journal reports.
The "swipe fee" typically charges merchants 1-2 percent of the total transaction amount, raising almost $20 billion per year for banks.
However, under this new regulation, merchants are expected to save big. Wal-Mart is projected to save at least $250 million annually, and experts predict Target to see similar results, The WSJ reports.
Extra funds will not stay in retailers pockets, stores maintain. "Such benefits are likely to include lower prices and investment in the business to better serve customers," Home Depot told the WSJ.
Banks, though, claim that fee cuts will adversely effect their ability to offer rewards and low fees. Countries like Australia, which have implemented similar fee cuts, have seen little to no benefit to consumers.
After the agreement was announced VISA and Mastercard, the world's biggest payment networks, gained 4 percent on Wall Street, Businessweek reports.
