Visa has announced that it will increase its fees on small debit card transactions as a reactionary move to the Federal Reserve’s recent cap on debit card fees.
The debit card fees, known as interchange fees, are charged by Visa and then paid to the debit card’s issuing banks, according to TheStreet.com.
Visa is one of the largest payment technology providers in the world and competes with other card issuers, including MasterCard, Discover Financial, Capital One and China’s Union Pay.
Sen. Dick Durbin (D-Ill.), the sponsor of the legislation that instructed the Fed to set the interchange cap, recently said that he is aware of Visa’s plan and that the Fed should monitor the issue and consider the income banks made from charging consumers for using debit cards as debit revenues subject to regulation, according to DigitalTransactions.net.
“On the regulated banks, that is banks over $10 billion in assets, we have noticed that what we thought would be a ceiling is now becoming a floor as well, with some retailers paying more in interchange fees up to the 24 cents or 21-cent level,” Durbin said, DigitalTransactions.net reports. “The Federal Reserve has, I think, the right and the responsibility to take a look at this change. I think they ought to also take into account when a bank is going to charge customers, as Bank of America is, an additional five dollars a month. I mean that is income to the bank based on the debit card. It goes through a different venue than the previous charges, but I think they ought to take that into account.”