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Fed to Propose Lowering Debit-Card Swipe Fees
- hiatus 3y agoNon-paywall: https://archive.ph/pdAG5 https://archive.ph/pdAG5
- robthebrew 3y agodebit card, not debt card.
- Racing0461 3y agoThere is also a supreme court case about if the fed has the power to do this without a law.
- dataflow 3y agoThe power to propose it? Or the power to force it?
- Racing0461 3y agoThe power of an executive branch agency to propose new rules. (ie new rule making without an act of congress).
- dataflow 3y agoProposing new rules isn't making new rules though? I would be surprised if anyone isn't allowed to propose new rules.
- thfuran 3y agoProposing a rule in this context is a step in the process of enacting it, not offering up a suggestion to Congress.
- dataflow 3y agoOkay but my question is still the same - is that step itself possibly illegal? I would think only the final step is what could be illegal.
- Racing0461 3y agoThe term "proposed" is used here where an executive branch agency gives notice to the federal registrar, waits the time needed for public comment, pretents to "ack" the public comments and passes said rule to then enforce. ie a law that pretty much bypasses congress. the supreme court seems interested in looking at how much power can congress give to the executive branch. see: https://www.federalregister.gov/uploads/2011/01/the_rulemaking_process.pdf https://www.federalregister.gov/uploads/2011/01/the_rulemaki...
- hiatus 3y agoHere's more info on the case for others interested. https://thehill.com/business/4231072-supreme-court-agrees-to-hear-debit-card-swipe-fees-case/ https://thehill.com/business/4231072-supreme-court-agrees-to...
- tomschlick 3y agoGovernment agencies should only be able to do what congress defines in law. A great example is ATF abusing the power to redefine what a pistol/rifle/machine gun are multiple times in the past decade. This leads to people who were previously compliant with the law, with prior written approval from the ATF, now are not compliant with their new definition and could face prosecution. All without any new law being passed, all being done by political appointees and bureaucrats.
- enragedcacti 3y agoGovernment agencies exist because congress is lazy and writing good regulation on every topic under the sun is hard. Congress describes what they want to happen, get their brownie points either from constituents or from rich donors, and move on. Regulators are then left with the actual work of creating the rules and implementing the systems that carry out that will. The amount and degree of interpretation they are allowed to do is obviously up for debate (and has been litigated thoroughly and repeatedly) but its really silly to say "just do what congress says" as if congress doesn't constantly defer its responsibility for creating regulations to the executive.
- willcipriano 3y agoCongress doesn't work that many days a year. Around 100 I think, lots of half days. They don't get to say anything is too hard until they work as much as a fast food cashier.
- enragedcacti 3y ago> They don't get to say anything is too hard until they work as much as a fast food cashier. It actually turns out that they do get to say this
- willcipriano 3y agoI was just teaching my 4 year old what euphemisms are last night. She had the same confusion.
- oh_sigh 3y agoI think the case is actually about forcing the fed to lower the rates because merchants think they are unfairly high, not whether they have the right to set the rates, which came from the Dodd-Frank Act.
- infogulch 3y agoThere's definitely some willing cooperation when Congress pawns off much of it's power to the administrative state, and dodging accountability is not the least among the reasons why (see the lack of single subject bills as another example). But agencies also just walk all over the boundary of the authority granted by Congress too, see West Virgina vs EPA: https://www.supremecourt.gov/opinions/21pdf/20-1530_n758.pdf https://www.supremecourt.gov/opinions/21pdf/20-1530_n758.pdf
- JumpCrisscross 3y ago> a supreme court case about if the fed has the power to do this without a law The Durbin Amendment specifically instructed the Fed to "limit fees charged to retailers for debit card processing" [1]. SCOTUS declined to review in 2015 [2]. I don't see anything on the docket challenging this precedent [3]. [1] https://en.wikipedia.org/wiki/Durbin_amendment https://en.wikipedia.org/wiki/Durbin_amendment [2] https://www.reuters.com/article/us-usa-court-debitcards-idUSKBN0KT1LA20150120 https://www.reuters.com/article/us-usa-court-debitcards-idUS... [3] https://www.scotusblog.com/case-files/terms/ot2023/ https://www.scotusblog.com/case-files/terms/ot2023/
- agloe_dreams 3y agoThis is all political theater legwork done just for one family. Upside: poor-person debit card use will not subsidize rich-person credit card fees. Downside: This does not actually help debit card holders. No business on earth will give Debit Card users a discount, it just will, in majority, bankroll rich company profits, which as we all know, has historically had no difference to consumers. When wallstreet makes more profits, the profit expectation rises, they never hand it back. This is just continuing to take from the poor but instead of giving it to one rich company, they are giving it to the other rich company. The Walton family is excited about this one. Edit: Ooh this was spicy. Looking forward to the Top of HN study outcome link stating the above.
- jrockway 3y ago> No business on earth will give Debit Card users a discount IKEA has had a debit card discount for at least 10 years.
- deleted 3y ago[deleted]
- agloe_dreams 3y agoAs far as I'm aware, that was only at exactly one store. I have never seen that at any Ikea in the US.
- vel0city 3y agoTarget gives 5% off if you use their "Red Card", which is just a debit card linked to your bank account. Spec's (a liquor store) offers a cash/debit discount.
- lotsofpulp 3y agoTarget is not giving 5% off for any debit card though, which they would have to pay significant fees for. Target gives 5% off for paying with ACH, which Target calls its “Debit Redcard”. You cannot use that Debit Redcard anywhere else, because it is not a debit card in the common vernacular, it is just Target’s way of letting you pay with an ACH transaction.
- kevinwang 3y agoWow, I had no idea the fees were so high
- em500 3y agoIn the Netherlands, debit card fees are 6 euro-cent per transaction and 0% of the transaction amount. Since debit card do not come with a loan/insurance/fraud protection/chargeback ability, there's only a fixed processing fee and no need to charge fees based on the transaction amount.
- diebeforei485 3y agoThis is bad. Low debit card fees make low-income people unbankable. https://kunle.app/feb-2022-children-of-durbin.html https://kunle.app/feb-2022-children-of-durbin.html
- pornel 3y agoEU has a cap on card fees, and low-income people have no problem opening bank accounts. They do get totally shafted on overdraft fees tho.
- diebeforei485 3y agoIt's not about opening accounts, it's about monthly fees. If banks can't make money from debit card transactions they'll have to charge account holders directly.
- rantallion 3y agoIn the UK, bank accounts rarely cost anything and debit cards come for free as standard. Banks are still profitable. I would hazard a guess that most banks in fact make most of their money through lending your funds to other people.
- jopsen 3y agoThat sounds more like you need to give poor people more money. Not even that much, just a little. Not that you need to fight caps on card fees.
- Scoundreller 3y agoI know this is highly EU-country dependent, but paying monthly fees for banking in USA is incredibly easy to avoid, but harder to avoid in EU. Could say the rich subsidize the poor in USA (by keeping more in 0.0001% interest checking accounts and more card swipes per month).
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- Sytten 3y agoIn Canada the debit fee is fixed (I think its around 0.10 to 0.40CAD) per transaction, no percentage. That's why you see a lot of places that only accept cash or debit (and not credit cards). I would be happy as a small SaaS owner and consumer to see those percentage fees disapear. I never have more than 1% cash back on the 3% that CC take.
- Scoundreller 3y agoSquare moved to charging a percentage on Canadian debit swipes last month: > Square’s processing fees are 2.65% per card present transaction, 2.9% + 30 cents per paid Square Invoice and Square Online sale, 3.4% + 15 cents per manually entered transaction and INTERAC debit cards are processed at 0.75% + $0.07 per tap or insert Unsure if this is pushing new Interac costs to buyers or a profit grab. It was just 10 cents flat per swipe, so anything over $4 and you’re worse off.
- epaulson 3y agoI just wish that merchants could pass the interchange fees on explicitly to customers, and so the folks who are paying with cards that have high-interchange fees pay more. I'm sick of subsidizing other people's airline mile because Target charges us the same price no matter how we pay, even if I'm using a cheaper payment method. My understanding is that the credit card companies as part of their merchant requirement prevent that, and it'd be nice to see the government explicitly prohibit that sort agreement. (Some stores creatively work around this by providing a "cash discount" or charge a 'convenience fee') Maybe the card with the higher interchange fee is worth it for the charge dispute or whatever, but if you want that piece of mind, pay for it your damn self. I think there's some additional complications that different cards charge different interchange fees and merchants don't find out what that fee is until well into the transaction, so maybe this is harder to do that I realize, but that'd be another spot for some good regulation to make the marketplace more transparent.
- nostromo 3y ago> I just wish that merchants could pass the interchange fees on explicitly to customers They can do this in almost all of the US, although a few states have limitations. Here's a good list of states and what their restrictions are on charging more for credit cards: https://www.usatoday.com/money/blueprint/business/credit-card-processing/can-business-charge-using-credit-card/ https://www.usatoday.com/money/blueprint/business/credit-car...
- Spivak 3y ago> I'm sick of subsidizing other people's airline mile because Target charges us the same price no matter how we pay You should actually love this because fees paid by the merchant are pure gravy for you as the customer. If they could charge more and get away with they should just do that. Externalizing the interchange costs would be a huge win for merchants because they just got free money while keeping the sticker price the same. All the benefit of hidden fees without the needing to hide it part, just like taxes. It would do nothing except make everything 2%ish more expensive for card users while you gain nothing. If you've ever wondered why companies push so hard against requiring display prices to include tax this is why. It's not the high cost of label printing, it's that they would just have to eat the 7% because they can't just hike prices without consumers reacting to it. Have you never noticed that despite the fact that different retail outlets take wildly different cuts it never manifests in significant price differences? "Cut out the middleman and buy direct" is often the most expensive way to buy something.
- hnburnsy 3y agoWont FedNow make debit cards obsolete?
- toomuchtodo 3y agoEventually, but that will take time as the scaffolding needed works its way through financial services firms like ACI and FiServ, and POS terminals and mobile apps gain support. In the interim, the Fed can squeeze this drag with regulation. https://www.axios.com/2023/07/22/fednow-instant-payments-credit-cards https://www.axios.com/2023/07/22/fednow-instant-payments-cre...