It’s April 21, and another Dodd-Frank deadline has come and gone. Today was the day the Fed's regulations on debit card transaction fees, also known as interchange fees, were supposed to be finalized. Hasn't happened.
Controversy over the regulations caused the Fed to postpone finalizing the rules. But that win alone wasn't enough for the banks, which have rallied behind legislation to delay the rules by at least another year.
The strange thing about this campaign is that debit cards aren't in danger—not from the proposed regulations, at least. Some consumers participating in the #savemydebitcard campaign don't seem to know that.
Participants have been tweeting that they love their debit cards because they “hate carrying loose change,” they can track what they spend (that one's from the spokeswoman for the group in charge of the campaign), and because “it's easy to use and faster than writing a check.” One noted that debit cards “eliminate lbs of paper waste.”
Those are all things that the proposed rules wouldn't actually change. The Fed's plan would limit the size of the per-transaction fees that merchants give to banks—and that's only for banks with more than $10 billion in assets.
Merchants and banks have given indications of how this fee cap would affect consumers. Merchants have promised that what they save in fees will result in lower costs to consumers. Of course that's not guaranteed to happen, and not everyone buys that it will.
Banks have warned they may end debit card rewards, increase ATM fees, get rid of “free” checking, or limit the size of debit purchases, as we've noted. These threats have caused some consumers to rally against rules that could lower the costs of the goods they purchase.
Big banks also have made timely contributions to the campaign coffers of Sen. Jon Tester, the Montana Democrat who proposed the legislation to delay the rule. Here's The Hill:
Six days after Tester introduced his legislation, which would delay implementation of the regulations by between 12 months and 18 months, executives at TCF Financial gave his campaign nearly $16,000 in contributions, including $9,000 from the company's political action committee.
That same day, Tester received $500 contributions from two executives at Wells Fargo; $2,500 from Richard Davis, president and CEO of US Bancorp, as well as $1,000 from the company's political action committee; $1,000 from Bank of America's PAC; and $1,500 from Discover Financial Services' PAC.
A few days later, the American Bankers Association delivered a $5,000 contribution.
The banking industry and the merchants coalition have each hired more than a hundred former government officials to lobby for their interests, according to Sunlight Foundation.
All the lobbying has resulted in a good amount of spin. Some consumers still seem utterly confused about the regulation and about who would benefit.
“Keep the Government from taking more of our good hard earned money,” wrote one Twitter user. Wrote another: “I love my debit card because I am able to use my money for things I need rather than pay for all those bank ceo 'bonuses.'”