Newspaper article The Christian Science Monitor

Financial Reform Bill 101: What It Might Mean for Your Debit Card

Newspaper article The Christian Science Monitor

Financial Reform Bill 101: What It Might Mean for Your Debit Card

Article excerpt

The financial reform bill passed Thursday in the Senate could reduce costs to retailers. That might allow them to offer you discounts for using cash or certain cards.

The financial reform bill that passed the Senate Thursday contains sweeping provisions that affect the big guys of Wall Street - Goldman Sachs, Bank of America, and so on. But tucked away in the fine print are things that could directly affect your own financial habits.

Take that plastic in your wallet. ("Please do," some of you might say. "I use it too much.")

The Senate legislation might change which debit or credit card you swipe, on a store-by-store basis.

Here's why: the bill would place a soft cap on the fees that banks charge retailers for debit card transactions. Most of us don't stop to think about it when we're buying that emergency cat food, say, but when we swipe that card, somebody has to pay to process the transaction. That somebody is the retailer. As you might expect, banks make a lot of money off this.

Right now, Visa and MasterCard charge retailers one to two percent of the cost of whatever you buy for the privilege of using their debit cards. That does not sound like much, but it is a lot more than what it costs the banks to actually process your payment. So a provision in the Senate bill would direct the Federal Reserve to issue rules making sure those debit card fees are "reasonable and proportional to the processing costs incurred." Or, in other words, lower.

(This would only apply to banks with assets of $10 billion or more.)

But that's not all, as they say on infomercials. Right now, it is technically against the rules for retailers to offer discounts to people who use certain debit or credit cards, or cash. It is also technically against the rules for them to set a minimum purchase price for credit or debit card use. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.