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Fed will soon decide whether to limit debit transaction fees
By Marvin Milner on Dec 12th, 2010
The Federal Reserve Board will meet on December 16 to discuss the benefits and drawbacks of instituting a limit on the interchange fees credit networks charge merchants for debit card purchases, according to a report from Bloomberg. The measure is part of the Fed's attempts to enforce the Dodd-Frank financial regulation act, which was passed earlier this summer. As per an amendment to that law, interchange fees for debit transactions have to be proportional to the cost of processing them.
The regulation, which does not affect fees for transactions involving credit card debt, stipulates that the Fed have the rules completed by April 21, the report said. After the central bank approves such a measure, it would be opened for public comment before being finalized by a vote.
Transaction fees can cost even small businesses thousands of dollars a year, and those for debit transactions in particular are likely cutting into retailer profits because of how much consumers now rely on these accounts in lieu of credit card debt.
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