After much discussion about the debit fee cap, the House Services Committee has decided to step in. This February, the House Financial Services Committee is poised to convene a hearing on a bill that would limit interchange fees.
The committee will convene a hearing on Feb. 17 on the controversial rule proposed this past December that would cap the maximum interchange fees charged by large banks at 12 cents per transaction. If implemented, the rule would lower future fees large banks charge merchants by more than 70% than the 2009 average, the Reserve Board noted at the time it proposed the rule.
Here’s a time line of events of events concerning the Federal Reserve’s interchange fee rules:
- July 21, 2011: The new rule takes effect
- Feb. 22, 2011: The 60-day comment period ends
- Feb. 17, 2011: The House Financial Services Committee convenes hearing on the proposed bill
- Dec. 16: The Board officially issues its proposed interchange fee rules, and instates a 60-day period for proponents and opponents of the bill to submit comments on the rule
- Sept. 2010: The Board distributes surveys to debit card issuers, payment card networks and merchant banks to assist it in developing its interchange rules
Interchange Fee Limits: Good or Bad?
Those opposed to interchange fee cap rules have argued that, if approved, they would simply force larger banks to find ways to offset the lost revenue. Already, debit rewards programs have come under fire, while free checking accounts are on their way to extinction because of federal regulations limiting fee policies.
Even Rep. Barney Frank, House Financial Services Committee Chairman and one of the architects behind the massive Dodd-Frank Act, expressed his concerns over the interchange fee cap rule included in his signature Wall Street reform and consumer protection legislation. Frank said in a Dec. 15 letter to the Board of Governors of the Federal Reserve his concerns that the proposed rule “may have unintended consequences for consumer choice, the protection of consumer information, and Congress’ intent to reduce burdens on community banks, credit unions, and government benefit programs.”