Federal Reserve Eyes Debit Fee Reduction, Sparks Market Response and Merchant Support

The Federal Reserve is anticipated to announce a proposal aimed at decreasing the debit interchange fees that banks are permitted to impose on merchants, reports Finextra. This forthcoming discussion is scheduled for an upcoming meeting next week, as reported by the Wall Street Journal, suggesting a potential reduction in the fee limit. In response to this news, the stock prices of Visa and Mastercard experienced a decline.

For the past 12 years, merchants have been obligated to pay banks a fee equal to 21 cents plus an additional 0.05% of the transaction amount for each debit card payment they process. Retailers have persistently advocated for the Federal Reserve to lower this fee cap. Stephanie Martz, the general counsel for the National Retail Federation, expressed their satisfaction, stating, "These fees have remained excessively high for an extended period, and we are pleased to see that the Federal Reserve is finally prepared to take action."

In a related development, the Supreme Court recently agreed to hear a case initiated by North Dakota merchants who argue that these fees are not proportionate to the actual cost of processing transactions.