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<\/p>\nThe Federal Reserve announced they have placed a cap on how much banks can charge businesses to swipe debit cards. These fees, known as swipe or interchange fees, were costing businesses an average of 44 cents per swipe. The new rules set the cap at 21 cents, cutting the fee in half. <\/p>\n
While this sounds good, it\u2019s not what many small business owners were expecting; the Federal Reserve had previously proposed a 12 cent cap. Though it\u2019s a step in the right direction, for many small businesses it\u2019s not good enough. From CNNMoney: \u201cOn a big-ticket item, a swipe fee is relatively negligible. But for lots of smaller purchases, the fees add up.\u201d<\/p>\n
Because there is no regulated minimum payment a customer must meet in order to swipe their card, many businesses find it hard to make a profit after the fees are paid. Some retailers have even gone as far as to become a cash-only business in response. Although this isn\u2019t feasible for everyone, the new cap may alleviate some of that burden.<\/p>\n
The hope is that the cap will somehow help stimulate the economy as some owners may use the savings to benefit the customer. Prices may drop, and as a result people may buy more; but only time will tell. In the meantime, now that banks won\u2019t be making as much from the debit card swipe fees, watch out for increasing bank fees. According to CNNMoney, \u201cBanks will make it up someplace else.\u201d<\/p>\n