Senate votes against denying card swipe fee change - KPLC 7 News, Lake Charles, Louisiana

Senate votes against denying card swipe fee change

On Wednesday, the Senate voted to allow the federal reserve to lower the fees retailers pay to banks and credit card companies when consumers swipe a debit card.

The Debit Interchange Fee Study Act of 2011 would have delayed swipe fee reductions included in the Dodd-Frank Wall Street Reform and require further research on the issue.

Senators who wanted to block the proposal needed 60 votes to prevail. However, Wednesday's vote was 54-45 - six short of 60.

Retailers currently pay an average of $.44 per swipe. The government plans to cap those fees at $.12 cents per swipe. The cap only applies to banks that are worth $10 billion or more for now.

Stores in the lake area spend thousands of dollars on the interchange fees for debit and credit card transactions.

"About 2,000 transactions a month are credit card transactions," said Lindsay Fuselier, a manager for Accessory Zone in Lake Charles. "Almost 70 percent of our sales are debit card or credit card sales."

Accessory Zone said the lower fees are a great thing for retailers.

"It decreases the cost and we can spend more money in other places where it's needed," Fuselier said.

However, banks must make up for the loss in fees that retailers will soon not have to pay.

"Interchange fees are what supports the debit card system," said Dan Donald, Chairman for Jeff Davis Bank and Trust Company.

Banks said they will have to raise fees such as checking account fees to make up for the loss in revenue.

"Bank customers are going to dislike what this causes," Donald said. "You're going to pay either a yearly fee or a monthly fee."

Donald said that Jeff Davis Bank will not be affected by the cap because they are a community bank. But since retailers will still pay the interchange fee for the smaller bank cards, community banks fear merchants will no longer accept their cards. 

"I think it's going to affect us because I don't think that merchants for very long are going to accept our cards," Donald said.

Donald said Jeff Davis Bank is currently preparing for the effects of the card swipe fee change.

"We have plans in place to look at an alternative fee schedule," Donald said.

The new card swipe fee rules are not expected to go into effect until July 21st.

 

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