The U.S. Federal Reserve dealt a blow to credit card providers and banks yesterday (Thursday) with a proposal to cut debit card transaction processing fees as much as 90%.
Congress directed the Federal Reserve as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act to review the debit card swipe fees - or "interchange fees" - charged by banks and card networks to determine if they were "reasonable and proportional" to the transaction processing cost. Analysts had expected the result would be a reduction in fees of up to 50%.
The proposal went beyond estimates, aiming to cap the interchange fees at 7 cents to 12 cents per transaction, or about 0.3% of the face value of the average purchase. This would be about an 84% drop from the current 1.3% average, or 44 cents, per transaction.
"Nobody expected it to be this draconian," said David Robertson, publisher of the credit-card industry newsletter the Nilson Report.
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Visa Inc. (NYSE: V), MasterCard Inc. (NYSE: MA) Suffer From Interchange Fees Slashing
Cyberwar Threat from WikiLeaks Hackers Overblown
WikiLeaks supporters have unleashed disruptive cyber attacks on a number of Web sites to get revenge on companies disassociating from the controversial non-profit media group and its founder, Julian Assange.
Since Nov. 29 WikiLeaks has released 250,000 confidential documents detailing U.S. diplomatic interactions with other nations, prompting a number of companies to cut ties with the group - though none have claimed government pressure encouraged them to do so.
The release has caused a freedom of information debate, with some supporting the documents' release and others calling it an act of terrorism.
Since Nov. 29 WikiLeaks has released 250,000 confidential documents detailing U.S. diplomatic interactions with other nations, prompting a number of companies to cut ties with the group - though none have claimed government pressure encouraged them to do so.
The release has caused a freedom of information debate, with some supporting the documents' release and others calling it an act of terrorism.