As a rule, I don’t like to rant about banks and insurance companies. Kind of the same rule I follow about talking politics or religion at a party or gathering. Never works out. Not for me, and not for anyone in the discussion. But in the case of insurance companies and banks, I don’t talk about them because I hate them both equally so I can’t discuss them rationally. These two financial institutions have never cared how their decisions affect their customers. They are ruled, run, managed, and bailed out so their private owners, stockholders and managers can get rich.
But today I couldn’t resist. There is another “showdown” in the Senate over whether to cap debit card fees to lower costs to merchants. (Showdown translates into which lobby has spent more money convincing Senators to vote one way or another.) Costs that would inevitably allow them to hire more workers they say. Banks are crying that they will have to replace the estimated annual $16 billion in revenue by charging higher fees for other bank services. Holy shit! Are the banks really trying to make us believe that the $35 they charge me for “accidentally” bouncing a check because it hit the same day the deposit did, isn’t enough to cover their costs if they really have any? Are they telling you that the maximum 44 cents per transaction that they are now charging every time you swipe your debit card is something other than pure unadulterated profit? Didn’t they also tell you that ATM machines would replace tellers thus reducing costs which they would pass on to you? See any of that savings? No, they just started charging you more and different kinds of fees, even to use a teller.
What the opponents are saying is that this will increase the burden on small banks, credit unions and savings and loans in rural America that will no longer be able to operate. Yeah, they’ll go right out of business because the cash cow from swiping debit cards will dry up. What the hell did they do before debit cards were in such widespread use? I’m not buying that argument. I remember when you had to ask if they accepted credit cards, or look for the logo sign in the window. It wasn’t that long ago.
Haven’t you ever noticed that there is no charge for the user (in most cases) to swipe the debit card, or use the credit card? The merchant pays, and some small businesses can’t even offer credit card sales because of the cost to them. Debit alone is 1-2% of the sale amount. My brother’s small framing business and gallery, in rural America, couldn’t accept credit cards. Think he lost business over that? Why did banks set it up this way? Because they knew you might be hesitant to use your card if you were being charged for the transaction, but the merchant would be forced to pay because of the demand for the convenience.
I don’t carry cash in my wallet anymore, well, even if I had money I wouldn’t carry cash in my wallet. The debit card is too convenient and is accepted almost everywhere. And guess what? I can’t “accidentally” overdraft my account because the transaction won’t complete without me having enough money in my account, or some type of overdraft protection (which I pay for). You can’t make a legitimate argument for the banks for the fees they now charge let alone give them free rein to charge what they want. How did they come up with the 44 cent cap per transaction? For that matter, how did the Fed come up with the 12 cent cap per transaction number? How about nothing per transaction? How about it should be part of the monthly checking fee that the debit card is attached to? Because it’s like selling ink for printers. It’s a recurring expense to the merchant, and the bank makes profit every time you swipe the card.
Is it right to cap it at 12 cents per swipe? Will it result in thousands of new jobs from small business? Will it result in lower prices? Hell, I don’t know. I would expect not in the latter two cases. Small business owners will see it as an increase in profit, not directly related to increasing the size of their payroll. I don’t think businesses hire employees just because they can afford it. WTF