Debt-plagued Consumers Could Benefit From New Regulations
The Federal Reserve Board has been mulling amendments to debit card interchange fees that could result in reduced debt for many Americans.
This proposal took another step towards actualization last week when the Federal Reserve announced plans to reduce debit card transaction fees by 90 percent.
The news caused stock in Visa and MasterCard, the world's largest payment networks, to plunge more than 10 percent, Bloomberg reports. Analysts say the new regulations could cut $15 billion worth of annual revenue for most of the major lenders.
"It is negative all around," wrote Scott Valentin, an analyst at FBR Capital Markets, the news source says. "This significantly impacts the business model for the networks."
The announcement was praised by U.S. Senator Richard Durbin, who helped push for the caps, the news provider says. He had previously campaigned on behalf of consumers and merchants saying the fees were unfair and did not relate to actual processing costs.
While the news may not be good for credit card companies, consumers are likely to benefit in the form of reduced prices at retailers. Merchants are likely to cut prices due to fewer expenses, potentially allowing shoppers to pocket more money and reduce their debt.