|
The
scheduled Fed board meeting will mark the first time in over a
decade that the central bank has proposed revising the fees,
which generated around $24.31 billion for lenders in 2019, the
most recent Fed data shows.
The Fed has not said how it plans to change the fees, which have
long been criticized by retailers as disproportionately high,
and a spokesman for the central bank declined to comment.
Analysts said they expect the Fed will initially solicit public
feedback on a range of topics, such as how technological
developments or shifting fraud patterns have affected costs.
Austen Jensen, a lobbyist with the Retail Industry Leaders
Association, which represents Target and The Home Depot among
other large retailers, said the group expects the Fed will
ultimately propose lowering the caps.
"It’s out of line, it needs to be adjusted," he said. "I feel
confident we’re going to come out on a good spot on this."
The Wall Street Journal reported last week that the Fed will
lower the caps, sending shares in credit card companies Visa and
Mastercard lower.
In a letter to the Fed sent Friday, nine major bank trade groups
said retailers don't pass on to consumers savings reaped from
the 2011 cap and that claims they would pass on future savings
"should be viewed with robust skepticism."
The 2010 Dodd-Frank financial reform law ordered the Fed to cap
the fees at a level that is "reasonable and proportional" to the
cost of processing the transaction. In 2011 the central bank
capped them at 21 cents per transaction, plus 0.05% of the
transaction cost. Banks can charge an additional cent per
transaction if they meet certain fraud prevention standards.
Analysts said that it is likely the Fed could face a legal
challenge from either industry if it pursues new caps.
TD Cowen analyst Jaret Seiberg said in a research note the Fed
"likely expects both the banks and the merchants to challenge
any final...rule even if that final proposal simply ratifies the
status quo."
(Reporting by Pete Schroeder; editing by Michelle Price and
Aurora Ellis)
[© 2023 Thomson Reuters. All rights
reserved.]
This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content.
|
|
