Chase Bank To Cap Debit Card Transactions?
New legislation on transaction fees prompts the financial giant to consider limiting your ability to swipe and pay based on the purchase price.
As new legislation goes into effect this July, banks will be forced to drop their interchange fees from around 44 cents to 12 cents per transaction. That might sound like good news for retailers who incur these fees each time a customer pays with a debit card, but banks such as JPMorgan Chase are now considering capping transactions at $50 or $100.
While a few cents per charge may seem paltry, these fees actually generate a sizable chunk of income for banks — according to the Federal Reserve, almost $16 billion in 2009. Chase’s idea is seen as one way to recoup the over $1 billion in revenue per year they stand to lose from the reduction in fees. A cap on debit card spending would encourage consumers to instead write checks, withdraw cash from ATMs, or use credit cards; all of which come with their own fees that banks can manage more freely. Analysts are worried about what effects such a drastic move could have on consumer spending, particularly for those who currently use debit cards to manage their finances more responsibly.