A Quiet Revolution in Debit Cards

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Last summer, Congress passed the Durbin amendment, which cuts interchange fees from an average of 44 cents per transaction to a maximum of 12 cents per transaction. Banks are retaliating with a major, expensive lobbying push to postpone or overturn the rules. The House and Senate both have responded by introducing bills that would delay Durbin amendment implementation.

New Cards Could Undercut Banks

"The retailers don't want to pay their fair share of this system," Trish Wexler, a spokeswoman for the Electronic Payments Coalition, which represents banks and the credit card networks in the fight, told Credit.com.

If it takes off, the National Payment Card Association's new debit card model could play a major role in the struggle over interchange fees. If the banks succeed in postponing or overturning the Durbin amendment and interchange fees stay at their current levels, the new cards could give retailers a way to undercut the banks, because the association will only charge a flat fee per transaction that is close to the 12-cent limit set by the amendment.

"It gives merchants the ability to really own the payment mechanism, says Portal.

The cards may be less appealing to retailers if the Durbin amendment goes into effect as-is, since the difference in transaction fees would be less pronounced. But even then, a debit card like this would give merchants the chance to put a branded card into more consumers' wallets.

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