Major Banks In Talks To Exploit Debit Card Loophole (msn.com) 52
JPMorgan, Bank of America, Wells Fargo, PNC, and other major banks have reportedly explored acquiring Fiserv's debit-card networks, STAR and Accel, in a move that could help them bypass federal caps on debit-card transaction fees. A law limits the fees big banks can charge merchants, but only if the transactions are routed through an outside network. There are no caps on these interchange fees over a bank-owned network, however. The Wall Street Journal reports: When Capital One Financial bought Discover Financial in a $50.6 billion deal, it got a network that cut out the need for a middleman in card transactions and allowed it to deal more directly with merchants. Now, big banks are looking on with envy because owning a network can mean exemption from a federal law that caps debit-card fees. Those fees collectively amount to billions of dollars each year across the industry, but banks have long complained the government-defined cap limits their ability to offer customers debit-card rewards and other services. Some have been exploring a small deal that could upend the rules, though they are worried about political backlash if they try.
Big banks including JPMorgan Chase, Bank of America, Wells Fargo and PNC Financial Services Group have in recent months held preliminary and tentative discussions about a deal to acquire a network owned by the financial-technology company Fiserv, according to people familiar with the matter. There is no certainty a deal will happen. Several of the banks that looked at the Fiserv network have already decided it would be unlikely for them to move forward, some of the people said. Some have privately expressed concern that such a deal could prompt backlash from lawmakers, regulators and merchants, the people added.
Big banks including JPMorgan Chase, Bank of America, Wells Fargo and PNC Financial Services Group have in recent months held preliminary and tentative discussions about a deal to acquire a network owned by the financial-technology company Fiserv, according to people familiar with the matter. There is no certainty a deal will happen. Several of the banks that looked at the Fiserv network have already decided it would be unlikely for them to move forward, some of the people said. Some have privately expressed concern that such a deal could prompt backlash from lawmakers, regulators and merchants, the people added.
debit card rewards (Score:5, Funny)
yeah, damnit, we can't charge you X so we can give X - some amount back to you and call it a reward
fucking reward schemes suck
Re:debit card rewards (Score:5, Insightful)
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I never use my debit card,... (Score:5, Insightful)
...and use a credit card instead. Why?
A debit card is a direct line to your bank account. If someone fraudulently steals money from my account, that's my problem.
A credit card is a buffer (with a limit) between a thief and my bank account. If someone compromises my credit card, that's the bank's problem.
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I have never had my debit card compromised. Ever. The fact that it's a direct line is what makes it not usable to buy things online, etc (generally). But it's very nice to use in person - I like that when I spend money, I'm actually spending it and not creating debt. (Don't get me wrong, I always pay off my credit card bills every month, which are not trivial sums .. but I'm only using them because they're the only things you can use online.)
Credit cards, on the other hand - we all pay for the insurance. It
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I like that when I spend money, I'm actually spending it and not creating debt. (Don't get me wrong, I always pay off my credit card bills every month
If you pay it off every month, it's not really debt, is it? You never pay any interest, and the only way it translates into actual debt is if you have more expenses than you can cover -- but in that case you'd be reaching for debt of some sort regardless. But with a CC you do get the fraud buffer (the fact that you haven't happened to need it, yet, doesn't mean anything), and you get to delay your payments by about one month, which IMO is really quite nice. I not only get a short interest-free loan, letti
I always use my debit card,... (Score:2)
...and use a credit card instead. Why?
A debit card is a direct line to your bank account. If someone fraudulently steals money from my account, that's my problem.
A credit card is a buffer (with a limit) between a thief and my bank account. If someone compromises my credit card, that's the bank's problem.
Which is why most civilised countries have a deposit guarantee scheme. So if your bank account is compromised you don't lose your money as the bank is supposed to guarantee it's security up to a given amount. In the UK that's £120,000 for individual accounts and double that for joint accounts. That is per account, so if you have £90,000 in one account and £110,000 in another account all £200,000 are covered (of course if I had that much just lying around I'd invest it but that is a d
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"Just give me 1% in cash"
That's still money that comes from somewhere. Like .. from you.
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Re:debit card rewards (Score:5, Informative)
Re:debit card rewards (Score:4, Insightful)
Let us not be under the illusion that business owners would lower their prices if it wasn't for those 'dang fees'. Once they realized you'd pay the hire price, if the fees are gone, the businesses are just going to go 'yummy more money for me'.
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Let us not be under the illusion that business owners would lower their prices if it wasn't for those 'dang fees'. Once they realized you'd pay the hire price, if the fees are gone, the businesses are just going to go 'yummy more money for me'.
Depends on how crowded the market is. If there's healthy competition, they might, or one of their competitors might, forcing their hand.
Re:debit card rewards (Score:4, Insightful)
Exactly. I was shopping recently for a high value item. I found one vendor who had it for sale with a 3% credit card fee. Another vendor had it for sale $1500 less. I asked him if he charged a credit card fee. He said no, that was the out the door price. So I bought it from him.
So the 3% was already in the lower price, but the other vendor was trying to double dip on fees.
Re:debit card rewards (Score:4, Insightful)
Many businesses offer discounts for paying in cash (if their agreements with credit/debit card companies allow it). Even with no discount, I'd rather have my money go to local business owners than to a bank.
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Many businesses offer discounts for paying in cash (if their agreements with credit/debit card companies allow it).
If I remember correctly, merchants could always give a discount for paying in cash, but they couldn't charge extra for paying with a card. They may be effectively the same thing, but what the credit card companies didn't want was people being unhappy that they were being charged more than the advertised price. Obviously the credit card companies did it for their own benefit, but it was also good for the customers.
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If I remember correctly, merchants could always give a discount for paying in cash, but they couldn't charge extra for paying with a card. They may be effectively the same thing, but what the credit card companies didn't want was people being unhappy that they were being charged more than the advertised price.
Sort of, but many of them have language that makes it ever more the same thing as a surcharge. Particularly in gun shops/shows, its VERY common to see "All listed prices include a 3% cash discount. This discount cannot be earned via credit card.".
What's crazy is when that put that verbiage on AUCTIONS. The auction price that I bid myself somehow is supposed to include a "3% cash discount".
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It used to be, maybe still is in some cases, the merchant contract forbid them from charging a different price to non-card customers. So if you wanted to accept cards at all you could NOT offer a lower cash/debit price.
The other reality is cash handling is actually expensive for retailers. I used to work retail finance decade ago so some of this is out of date info, but generally speaking on an activity based cost analysis, the merchant fees were lower than cash handling costs. At least in the later 90s an
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Once they realized you'd pay the hire price, if the fees are gone, the businesses are just going to go 'yummy more money for me'.
This is dumb shit. Many stores around me explicitly charge you the difference if you pay by credit card to cover the service fee.
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Let us not be under the illusion that business owners would lower their prices if it wasn't for those 'dang fees'. Once they realized you'd pay the hire price, if the fees are gone, the businesses are just going to go 'yummy more money for me'.
Are you joking?
Merchants would love to lower their prices, they do it all the freaking time. Even if they only reduce the price by half the amount they save, it's still a win for you (in fact it's a win/win for everyone except Mr Bankster).
Re:debit card rewards (Score:5, Insightful)
Re:debit card rewards (Score:4, Insightful)
If there we a 'don't be scum' law, the card companies would be in big trouble.
Use the magic words (Score:3)
The money is charged to the merchant, yes thats true.
How much off for cash?
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they wind up paying for most of the fees
Not if I pay cash.
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That "reward" comes from the money the merchant pays, and then they just raise the price of the product to compensate for their calculated loss. Rewards are not free magic money, you actually paid that money up front when you bought the product, and here the CC company is just giving you a mere fraction of that increase in price back to you, just to make you feel good. Are people really this stupid?
It is worse than that. Airlines are now making more money from credit card deals than flying flights. This whole kickback system has been hugely corrupting. Now they want to extend it to debit cards. It is past time to get rid of the entire thing.
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That "reward" comes from the money the merchant pays, and then they just raise the price of the product to compensate for their calculated loss.
All that means is that you are punished for NOT using a rewards card. The merchant has already baked the cost of doing business with the CC reward companies into their price, so if you pay with a simple debit or a card that offers no rewards, you are paying the higher price to no benefit. I pay off my CC bill every month anyway. I might as well get 1% or whatever pittance back as an Amazon gift card or whatever every few months. It is better than paying the same price and getting nothing.
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Sort of. The "rewards" are also there to make people spend using the credit card and carry a balance. They know if people think they're "making money" while charging purchases that they're more likely to rack up that total. They know they'll make more via the interest charges in the long run. Sure some particularly responsible card users may be able to game it for some rewards, but they'll be so much in the minority that it won't matter.
Debit cards don't carry that potential, so you won't find any debit
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I own a retail business. I have a sign between the cash register and the credit card terminal warning customers that it costs them 4% more to pay by card than cash. It also shows on their receipt that they paid the 4% additional for using a card.
Nobody cares.
Customers would rather pay a few % more for the convenience of card over cash. Admittedly, transactions at my store are usually small, so it is just cents per transaction -not $$ per. I can go entire days without a single cash payment. It is the wa
Time to establish a cap for in-network. (Score:5, Informative)
It really does not make sense to have a cap only for out-of-network, when in-network arguably are less cost for the institutions. But of course banks are spending a lot of money on both parties so...
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The cap out of network was established to force the network companies to become sort of generic open infrastructure companies rather than being able to establish and abuse a monopoly position or by strengthening one company over another by negotiating different rates.
I know what you're saying, and yeah fees should be capped, but it made sense for its purpose.
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Re:Time to establish a cap for in-network. (Score:5, Interesting)
The problem is now that it exists, other large banks are looking at a swipe fee advantage now that Cap1 acquired Discover and that Dick Durbin is now on the verge of retirement unlikely to buck his prior law, the other large banks are realizing under the current administration, such a move of a megabank acquiring major debit networks is likely to escape unscathed from regulators...
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It really does not make sense to have a cap only for out-of-network, when in-network arguably are less cost for the institutions. But of course banks are spending a lot of money on both parties so...
At some level, it does. When these laws were passed, I think the main goal was to stop companies from charging exorbitant fees to other companies' cardholders when using their ATMs to withdraw money and similar. You wouldn't want to do that to your own customers, because you'd lose them as customers, so why would the government regulate it?
But now, years later, in the context of retail sales, card companies want the opportunity to charge higher fees to retailers so that they can give rewards, confident th
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I mean is it news for nerds? Not really.
Is it par for the course for slashdot? Yup.
Yell at the cloud, I won't stop you.
Re:This isn't a loophole (Score:4, Informative)
How does this get modded insightful, it is completely ignorant of the facts stated in the summary.
And the FTC... (Score:1)
...will do nothing under this administration, as long as Trump gets his cut of course.
At What Point Does It Rise To Collusion? (Score:5, Interesting)
JPMorgan, Bank of America, Wells Fargo, PNC... reportedly explored acquiring Fiserv's debit-card networks, STAR and Accel, in a move that could help them bypass federal caps on debit-card transaction fees.
So at what point does this rise to the definition of collusion? This seems to fit my understanding of the definition.
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Out of Control (Score:2)
Loopholes will be exploited (Score:3)
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