Talks of the impending debit interchange fee caps are pushing big banks to consider imposing limits on debit card purchases.

According to the Federal Reserve, debit cards have become the most popular form of non-cash payments in the United States.

The Fed’s proposal to cap the interchange fees at 7 to 12 cents per debit transaction, which would reduce the particular channel of bank revenue by as much as 84 percent.

Banks Could Limit Debit Card Transactions

Most likely to take the biggest revenue losses are the largest banks including JPMorgan Chase, Bank of America® and Citigroup. They are deliberating the possibility of placing a limit on each debit card purchase to $50 – $100, if interchange fees are capped, reported ABC News.

As the public comment period on the Federal Reserve’s proposal came to a close on Feb. 22, banks implored Congress to reconsider due to the possible adverse effects that the changes would have on low-income consumers, the banking industry, and the U.S. payment systems.

With the chances of the big banks limiting the size of a debit card purchase, consumers would have to choose between the using traditional, inconvenient payment options such as cash and paper checks or the debt-burdening credit card. Banks would be happier if shoppers decide to use credit cards for larger purchases because the proposed interchange fee rules do not apply to credit card swipe transactions.

The Fed is expected to finalize the new rules from now until April. Revisions to the debit interchange fee caps remain possible and the big banks will most likely react accordingly in their best interest. It is just one more way that this particular provision of the Dodd-Frank Act can affect consumers directly.

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