The bill to curb credit card fees that was being floated last night ended up passing. Credit card industry stocks fell Friday on the news.
Every time you swipe your card at the store, a fee gets charged. Not to you, but to the shopkeeper. Merchants can only cover these costs, known interchange fees, by passing on higher prices to all customers, even those that used cash, or by violating their merchant agreement and requiring a minimum amount for credit card purchases. But all that will change, and store-owners will be able to give you discounts for paying in cash, if the bill that passed yesterday’s Senate vote becomes law.
The bill proposes to give the Federal Reserve the power to regulate these interchange fees and set them at rates that are “reasonable and proportional to the actual cost incurred,” rather than whatever the market will bear.
In addition, merchants would be able to give discounts to customers who use cards from other card networks, presumably, those with lower fees, and, good news for you, give discounts for using alternate forms of payment, like the good ol’ American fee-free standby, cash. Also, it would no longer be a breach of contract for merchants to set mins or maxes for any form of payment.
Mo competition, mo better, right?
Card issuer shares decline as new regulation looms [Reuters]
Senate Considers Credit Card Fee Relief for Merchants [NYT]
(Hat tip to LowCards.com)