As previously reported on our blog the Dodd-Frank Act directs the Federal Reserve Bank to limit the fees banks collect from retailers each time a customer makes a purchase with a debit card to a „reasonable and proportional“ amount.
Whereas merchants were delighted contending that these fees are hindering business growth, expansion plans and the recruitment of new workers, banks and debit card companies storm Capital Hill stating that their tremendous loss will result in either not issuing debit cards to customers anymore or in raising other consumer banking charges. Lenders like Bank of America, JP Morgan Chase and U.S. Bancorp already chose the second option. Moreover, it is not understandable why especially giant retailers like Home Depot and Wall Mart should profit from it. But what about smaller banks?
Although they are supposed to be exempted from the law, they are worried about not being able to persist in the market since big banks have no other choice than offering lower fees. The ongoing discussions and different sights of the story made several politicians and lawmakers doubt the meaningfulness of the debit card amendment they have been once so supportive of. It remains to be seen what July brings, the month when the Act is supposed to be put into effect.
und viele Grüße aus Charlotte
Reinhard von Hennigs