KELO generally enjoys blowing the usury industry's smoke about how regulations raise their costs and force them to lay off workers. But KELO slipped Wednesday night and admitted that the Federal Reserve's new debit card rules are intended to lower costs for all other businesses:
The new debit card fees follow federal regulations that cut the average amount that merchants pay for debit transactions from 44 cents to 24 cents [Angela Kennecke, "Avoiding Debit Card Fees," KELOLand.com, 2011.10.12].
The debit card regulation didn't cut the interchange fee as much as merchants wanted, but it was an effort to reduce some of the redistribution of wealth from Main Street to Wall Street. The 1% on Wall Street keep looking for new ways to erode property rights and charge the 99% to use their own money. That's not even usury; that's robbery.
This entire issue has made me chuckle if it wasn't so anti-consumer.
Years ago, the merchants clamored for more and quicker access to use credit/debit transactions because they sped up their check-out lines and eliminated bad checks. Plus, it made it easier for consumers to spend money at their place of business.
The credit/debit card clearing house made significant investment to provide this service to merchants and 100% (have you ever seen a "transaction fee" on your bank statement? Nope) of the cost was borne by merchants.
Now, the merchants got what they wished for. A very high percentage of their transactions are now credit/debit card transactions resulting in the transaction fee being a major cost of business (they obviously can't pass on because what is your reaction when you see a surcharge for debit/credit card transactions? Not good) so they asked for the government to get involved.
So, what has happened is the credit/debit card clearning houses (Visa, Master Card) is going to replace this lost revenue by charging your credit/debit card issuer a transaction fee. And, then you get first Bank of America (all will follow suit in time) announcing they will charge their customers a $5 fee per month for using their debit card. Your credit card company will soon either institute an annual fee, increase your rate, or have a "transaction fee."
Bottom line: Because Congress has decided to favor business over the consumer, we will not get a annual fee. Frankly, I don't mind the "transfer" as I do get benefit from having a debit card (previously "free" when I know nothing in life is really free) but we have made the system more inefficient as we now have added costs to the total system (merchant still pays a transaction fee and cost to implement/collect hasn't changed but now your bank has to pay a fee and they charge you so total costs have gone up) with no real "benefit" to me as a consumer.
So, on the surface once again, something sold as pro-consumer will actually hurt the consumer. Ironic.
Yes, there was also a big push to get everyone using bank cards and online banking so the banks could more thoroughly automate their processes and save on labor costs. Now they want to charge those of us who have accommodated them for the pleasure of saving them money. Also ironic.
I appreciate the reminder that Troy's overview gives. I really chafe at being charged just to spend my money.
I made some reference to this issue on my blog. Cory responded that we'd soon see fees for cash transactions. I think he's right.
Keep in mind this doesn't cut the transaction fee for all banks, just the super large ones with assets over $10 billion. So in Madison, it affects Wells Fargo now and when Great Western exceeds that threshhold in a few years, that bank will be affected as well. That leaves three other banks in Maidson unaffected by the change in fees. Yes, it will provide some relief for retailers, but I guess it all depends on the number of customers who use the bigger banks. The question is, will businesses pass on their savings to the customer or will they simply pocket the extra revenue.
Wells Fargo, as well as most of the large nationwide banks, got bail out money from us, the taxpayer, now they want to gouge. If anyone gets charged for their debit card, they should switch to their local bank or local credit union. Probably they should be using their local bank or credit union anyway.
Troy is right. We should just bend over and take it...the job of business is to make a profit and if that means that consumers have to bite the bullet, well better that the average hard working American takes it in the shorts than them jepordizing executive bonuses or shareholders.
Troy is there something else we can give them so that they'll be happy? I mean really, they are big enough to tear down a global economy we need to make them happy right? Are there any virgins we can sacrifice? Would that be enough?
Does anyone remember getting a thank you note from all of the banks that grabbed up the tax payer money in TARP, TARF...0 interest short term loans from the Fed window? Didn't think so.
So the retailers get a break from the banks debit card swipe fees. Anyone notice a decrease in retail prices as a thank you from retailers? Didn't think so.
Here's a link on 5 easy ways to leave your bank. Oh and small banks and credit unions, we hope you will remember that the customer does actually matter.
http://www.money-rates.com/news/fed-up-with-fees-5-steps-to-switch-your-bank.htm/?WT.qs_osrc=HFP-27826110