I note that the Feds are now requiring banks to halve the amount merchants are charged for credit cards, from about 44 cents to about 22 cents. Seems like a good deal, right. Wrong. Take a look at these graphs from the story in the New York Times.:
Banking trade groups, retailers and consumer advocacy organizations all expressed some dismay at the Fed’s announcement — the bankers because they stand to lose fees and the retailer and consumer groups because the final charges rose sharply from the Fed’s initial proposal.
“While Congress spoke clearly that fee-fat banks can no longer sneak billions of dollars in stealth charges from debit card users, it appears that the Federal Reserve buckled under the weight of the banking lobby,” Bartlett Naylor, a financial policy advocate for Public Citizen, said in a statement.
Mallory Duncan, chairman of the Merchants Payments Coalition, a retailers’ group, called the new rule “unacceptable to Main Street merchants” and said the Fed “very clearly did not follow through on the intent of the law.”
Some banking groups also adopted a glass-half-full position. Frank Keating, president of the American Bankers Association, said the Federal Reserve took “a significant step in reducing the harm that could have resulted from the proposed rule.”
Originally the Fed proposed to lower the rate to 12 cents, but heavy lobbying by banking interests changed that little commitment. I just got a note from one of the parking organizations (IPI) touting this reduction as a boon to the industry. And don’t get me wrong, it is. But the banks that set up the credit/debit card programs for parking were the same guys that got the fee raised from 12 to 22.
After all, the money, or part of it, came right out of their pockets. Just who does represents parking companies, anyway? 12 cents is not a lot of money, right. The banking industry collected $10 billion last year in these fees alone.
JVH
