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Archive for Friday, May 14, 2010

Bill would reward cash, check, debit card users

May 14, 2010

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— Banks and retail organizations squared off Thursday as the Senate sought to make it possible for merchants to offer customers discounts if they use cash, checks or debit cards.

Both sides were heavily lobbying a measure by Sen. Richard Durbin, D-Ill., that would force credit card companies to charge businesses less for debit card transactions than credit card payments.

Durbin, the second ranking Democratic leader in the Senate, wanted the proposal considered as an addition to a package of new financial rules the Senate is considering to ward off a repeat of the financial crisis.

Under current practice, a business that accepts major credit cards signs agreements with the card companies to pay a percentage of each transaction, usually about 2 to 3 percent. But credit card charges cost more to process than swipes with a debit card.

The change would represent the most direct and tangible consumer benefit of the regulatory overhaul and would amount to a triumph for Durbin who failed to get a similar proposal attached to an overhaul of credit card regulations last year.

The issue pits the politically popular appeals of small business owners against the influence of community banks and the lobbying power of the credit card companies.

Durbin wants the Federal Reserve to ensure the fees that credit card companies charge for debit card use are proportional to the costs of processing the transaction.

Durbin’s measure requires that once merchants can pay lower fees for debit card purchases, they would be able to offer discounts to their customers based on their method of payment. To win more support, Durbin included an exception from the fee requirement for banks with assets of less than $10 billion. Durbin said even with that exception, his legislation would affect 65 percent of all card transactions in the United States.

Still, the Independent Community Bankers Association opposed the proposal, arguing large retail merchants may choose to accept only the cheaper cards offered by large banks or that small banks will be forced to accept the lower fees big banks would receive.

Retail groups countered that any reductions in fees would be passed on to consumers. Henry Armour, president and CEO of the National Association of Convenience Stores, said credit and debit card fees are the second biggest expense in his industry, behind labor costs.

“This is an issue that affects in our industry 160 million consumers a day,” Armour said.

Comments

aldo 3 years, 11 months ago

unnecessary ... MC/V already allow merchants to discount for cash and debit is less expensive than cc acceptance ... they need to do their homework and not try to legislate something that has been in play for a long time. This is ploitical grandstanding of an existing industry norm. Many gas stations have offered cash discounts for years.

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scopi_guy 3 years, 11 months ago

An auction house I go to used to charge a 5% fee if you paid with plastic. Got in trouble because that was against the law in the state they operated from. The got around it by switching to charging a 5% fee (in addition to the buyer's penalty they already charged) on every item sold but it was waived if you paid with check or cash.

Sounds pretty similar to me.

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Richard Heckler 3 years, 11 months ago

I say take the tax dollars back from the banks and if two or three go under so be it.

In the first place BUSHCO was lying when saying several large banks were in big trouble. The facts after fact revealed AIG,Citicorp and Bank of America were the only ones in real danger.

Apparently BUSHCO treasury secretary told other banks THEY WOULD take some money in spite of the fact some did not want it....

http://www.democracynow.org/2009/9/10/good_billions_after_bad_one_year

Both sides of the aisle should have investigated the BUSHCO admin findings before turning the money over to the BUSHCO treasury secretary.

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SettingTheRecordStraight 3 years, 11 months ago

"...that would force credit card companies to charge businesses less..."

The public should be deeply skeptical of any law that would "force" a company into a business practice.

"...the Senate sought to make it possible for merchants to offer customers discounts if they use cash..."

Merchants are already free to offer discounts to cash-paying customers.

"...ensure the fees that credit card companies charge for debit card use are proportional..."

This is basically price-fixing.

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none2 3 years, 11 months ago

Our government is out of control. Perhaps the goverment would like to take over the credit card business?

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Richard Heckler 3 years, 11 months ago

Why is it that merchants do not require signatures on charges of $25.00 or less?

No signatures and no ID checks sorta opens doors for major theft???

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Hydra 3 years, 11 months ago

way to spin it. does anyone think stores will charge less? just another way to charge more

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Hydra 3 years, 11 months ago

way to spin it. does anyone think stores will charge less? just another way to charge more

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