The Fed is currently in the process of meeting to discuss changes to debit-cards that will not only affect consumers and retailers but will also have a big impact on banks.
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Yesterday, we reported the importance this meeting has to the fate of banking. The Feds main goal is to look out for the consumer, gathering from comments made during the meeting they believe that interchange fees are unnecessary and not transparent. They also mentioned that the credit card issuer market is not as diverse as it should be and has become concentrated around two companies. The Dodd-Frank Financial Reform bill has already brought upon many changes to the way consumers bank. One example is giving consumers the option to opt-in to overdraft fees — saving many the headache of unnecessary overdraft charges.
Each change has brought mild controversy, but banks are particularly nervous about the outcome of this very meeting. Limiting or eliminating interchange fees that consumers have to pay every time a card is swiped would be an extremely big blow to bank’s capital, a 50% blow to be exact. Experts have come out to say that these fee limitations would ultimately end up hurting the consumer as banks continue to scramble for ways to make up for lost revenuer.
This is the first time the Federal Reserve Board has broadcasted a meeting. The Board consists of Ben S. Bernanke the chairman, Janet L. Yellen the vice chair, Kevin M. Marsh, Elizabeth A. Duke, Daniel K. Tarullo and Sarah Bloom Raskin.