In 2010, Congress passed legislation—Dodd-Frank!—to protect us defenseless customers and small-time merchants from "swipe fees," the surchange banks and processing companies impose every time you use your debit card to buy stuff. That legislation ordered the Federal Reserve to set a cap on those fees, which it did in June. And now:
•You may have to pay cash for a cup of coffee or pack of gum.
In the past, card processing networks such as Visa and MasterCard, which set debit card fees and process them on behalf of financial institutions, gave retailers a discount on fees for small transactions, usually of less than $10. Once the cap on debit card fees took effect, though, those discounts were eliminated. Retailers who previously paid as little as 4 cents on a debit card transaction found themselves hit with a 21-cent fee, says Alex Matjanec, co-founder of MyBankTracker.com.
"A customer buying a can of soda on a debit card is costing me more today than it did before the legislation," says Ari Haseotes, president of Cumberland Farms, which operates almost 600 gas and convenience stores in 11 states across the Northeast and in Florida.
Some retailers have raised prices to cover the higher fees, while others stopped accepting debit cards for small purchases, Matjanec says.
Lots more on the totally predictable unintended consequences of financial regulation.