Senate approves measure cutting debit card fees

The United States Senate approved a bill this morning that would place new limits on what processing companies can charge for debit card transactions.

Illinois senator Richard Durbin’s plan forces 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 then would be able to offer discounts to their customers based on their method of payment. Merchants would be prohibited from placing minimum purchase requirements for the use of a debit card.

In an effort to win more support and avoid community bank opposition, 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.

The prices for stock in credit card processing companies like MasterCard and Visa dropped significantly on the news.

 

By Doug Beaton

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