As they prepare to issue final rules on interchange fees, the Board of Governors of the Federal Reserve System is receiving numerous letters from members of the American Bankers Association that the new rules will harm banks and consumers.
ABA President Frank Keating sent a letter to Fed Chairman Ben Bernanke reiterating his concerns that the new regulation will harm banks, consumers and the overall payments system, LoanSafe.org reports. He asked that revisions be made to prevent “dire consequences.”
The rule, aimed at capping fees banks charge retailers for debit card transactions, passed Congress last year as part of a financial regulation overhaul.
In his letter, Keating said that the statue fails to consider the costs necessary to carry out individual transactions and also fails to consider costs associated with fraud losses which are specifically tied to electronic debit transactions, according to LoanSafe.org.
These costs, according the letter, should be included in the cap. The letter also asks for revisions that include community bank exemptions.
Since the statue exempts banks with fewer than $10 billion in assets, retailers may opt for the lower-cost debit providers instead of community banks, Keating wrote in his letter.
The letter followed numerous letters from ABA members outlining concerns with the rule, according to LoanSafe.org.
Keating said in his letter that these concerns have also been echoed by House Financial Services Chairman Spencer Bachus, ranking member Barney Frank, a diverse group of house members, federal and state regulators, and consumer groups.