For years merchants have been asking the Fed to reduce interchange fees. Merchants pay banks 21 Cents plus 0.05% of the transaction cost for each transaction, a level fixed by the Federal Reserve 13 years ago. It’s been reported that the Federal Reserve is ready to propose reducing debit card fees for merchant and the U.S. central bank announced a meeting scheduled for October 25 to address the issue. This could be a huge win for merchants who continue to deal with increases on credit card processing fees, but this will for sure involve intense lobbying efforts by card issuers and merchant association.
After years of trying to acquire support for the Credit Card Competition Act, proponents of the legislation are gaining some support, and are once again trying to pass it this year. Proponents say this would give merchants more choice by letting them use networks with lower swipe fees than those offered by VISA and Mastercard. This fight is far from over, as lobbyist for the credit card giants continue opposing the bill, saying it would affect their bottom line and operations especially when it comes to reward programs that they argue are possible by the interchange fees they charge merchants.
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