The final rule on debit card swipe fees will be issued by the Federal Reserve on Wednesday, potentially creating less favorable interest rates on high-yield checking accounts and unattractive terms and yields on other banking products and services.
The Fed’s suggested cap on interchange fees of 12 cents per transaction could slash revenues for financial institutions and other companies that process debit card transactions, DailyFinance.com reports.
“When the Federal Reserve meets Wednesday, we doesn’t expect a material change from their earlier proposal of 12 cents,” Patricia Hewitt, director of debit advisory services for Mercator Advisory Group, told DailyFinance.com.
Financial institutions, facing a loss of revenue, could potentially dramatically alter the interest rates paid on their high-yield checking accounts or increase the number of debit card transactions required by an account holder in a given month, Bankrate.com reports.
According to a 2011 Bankrate.com survey of 155 financial institutions, the average interest rate paid on a high-yield checking account fell to 2.56 percent this year, compared with 3.3 percent last year.
For high-yield checking accounts, banks currently require customers to make 11 debit card transactions per month and use some of the bank’s other services, including direct deposit or online bill pay.
With the expected 12 cent cap on debit swipe fees, however, financial institutions are expected to bump their per-month transaction requirements to as high as 37 transactions a month, Bankrate.com reports.