Small banks fear fee declines

Associated Press

NEW YORK

Could a limit on the fees retailers pay on debit-card purchases cause your bank or credit union to fail? That’s the dire picture some are painting as a cap on so-called swipe fees nears.

An attempt to delay the start of a cap on the amount banks and payment processors, like Visa and MasterCard, can charge merchants for handling debit transactions failed to pass the Senate on Wednesday. That means the Federal Reserve will go ahead and implement the rule, part of last summer’s financial regulatory overhaul.

The Fed has proposed a 12-cent cap for each debit purchase, a sharp cut from the average 44 cents retailers now pay. The regulator must issue a final version of the rule, which will take effect July 21, in the next few weeks in order to give banks and processing networks the time to comply. It is possible that the 12-cent cap could change before the rule is finalized.

The industry estimates that as much as $14 billion in revenue could be lost.

Jim Blake, CEO of HarborOne Credit Union in Brockton, Mass., was hoping the Senate would approve the delay, which would have also required study of the cap’s impact on community banks and credit unions.