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Archives / 2010 / December
  • Analyst Speculate on Impact of Fed's Debit Card Proposal

    On Thursday, the Fed issued a proposal to set a price cap on debit card Interchange fees under new powers from the Dodd-Frank Act. Since then there has been much speculation on its impact.

    Interchange fees are paid to the banks that issue debit cards when they are accepted for payment. The fees that Visa and MasterCard charge are excluded from this regulation. Yet in question is their business model. Are the card brands value-added service providers or has their success turned them into just another type of utility company that should be regulated by the government?

    Visa and MasterCard made headlines on the news with both experiencing major stock price declines. Merrill Lynch speculated that banks will seek financial concessions from Visa and MasterCard to make up for lost debit … more

  • Debit Card Chaos on Fed announcement

    clip_image001 Breaking Payment Industry News – Fed announces Debit Card Rates and Rules for Comment

    In a history making live webcast, the Federal Reserve Board announced proposed debit card Interchange rates and rules under the controversial Durbin amendment of the Dodd-Frank financial reform act. Noting the short time frame provided by the bill to undertake such an important and complex issue, the Fed voted unanimously to submit proposed debit rule recommendations for public comment.

    In the debate over fees, the Fed is looking for input on the provision requiring debit Interchange to be “reasonable and proportional” to the cost that card issuers incur. The Fed is proposing to two alternatives: a $0.07 safe harbor price along with a $0.12 cap or a $0.12 cap for all transactions. … more

  • The Paperless Check Emerges in 2011

    paperless_check_on_iphone I envision a better ACH. One that lets me pay anyone from any personal or business checking account I choose without having to give up my sensitive account information or authorization to withdraw funds. It would be very secure and I would control both the access and the timing of when I choose to make a payment. And it would be convenient. It would work with my existing bank so I wouldn't have to deal with the hassle of moving funds in and out of a 3rd party "holding account" like PayPal.

    My mobile device would become my digital checkbook and registry. At my business I would write digitally originated checks straight from my accounting, CRM or ERP system. For proof of payment and for my own record keeping I would get the cancelled check image returned with my bank statement.

    Anyone who … more

  • Substituting Debit with Prepaid

    If you subscribe to the Vantage Viewpoint blog, you know that The Wall Street Journal article this week “Banks Pin Revenue Hopes on Prepaid Cards” confirms the prediction put forth in our analysis of the Durbin Interchange amendment back in June of this year.

    As reported in the WSJ, mega banks are “exploring prepaid cards as a way to make up revenue that will likely be lost from federal restrictions on debt cards.” In our blog post under the section “Exemptions for government administered cards & reloadable prepaid cards” we envisioned the compromise exempting reloadable prepaid debit cards from Interchange regulation under the Dodd-Frank financial-overhaul bill would result in “banks moving more and more consumers to exempt prepaid card … more

by Ty Hardison

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