WASHINGTON — A proposal from the Federal Reserve could limit debit interchange fees—charges associated with accepting debit-card payments—to 12 cents per transaction. If enacted, the proposal stands to benefit small businesses.
The average interchange fee for debit transactions in 2009 was 44 cents per transaction, according to Fed research. “Setting a cap ensures that no issuer is able to receive an interchange fee at an unreasonably high level,” the proposal says.
The fee cap would apply to banks and card issuers with assets of $10 billion or more, but not government-administered programs and certain prepaid debit cards. Another part of the proposal seeking to ease restrictions on the routing of debit transactions to particular networks would affect all issuers.
Retailers are pleased with the proposal. “Today’s proposed rules are a step forward in bringing fairness and transparency to the debit-fee system,” Mallory Duncan, chairwoman of the Merchant Payments Coalition, said in a statement, applauding the “historic swipe-fee reforms passed by Congress earlier this year.
“Today’s proposal will result in savings for small businesses and consumers,” she added. “While no interchange fees should be allowed on debit transactions, the Fed’s proposal demonstrates real progress toward that reasonable goal—and parity between checks and debit cards.”
Some banks, however, are not pleased with the proposal. TCF National Bank filed an injunction against any rules resulting from Dodd-Frank Wall Street Reform & Consumer Protection Act that makes the Fed’s action possible. Dodd-Frank became law in July, calling for curbs on debit- and credit-card fees.
Public comment on the proposal is open through Feb. 22, 2011, with a final rule to be issued April 21.