NEW YORK (AP) - The Federal Reserve on Thursday proposed a 12-cent cap on the fees banks would be allowed to charge merchants for debit card transactions, a limit some estimated could cut up to 90 percent of the revenue collected through such fees.
Capping debit interchange fees, sometimes called swipe fees, would help merchants. Under the existing system, the Fed said the average debit transaction fee in 2009 was 44 cents per transaction, or 1.14 percent of the transaction. When the customer signed for the purchase in the same way they would for a credit card purchase, known as signature debit, it was 56 cents, or 1.53 percent of the transaction amount.
The proposal also would require that merchants have a choice of unrelated networks to process transactions, like Visa Inc. and MasterCard Inc., which could further limit revenue for those companies.