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Originally Posted by Undertoad
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From your link:
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On Saturday, a new rule went into effect capping debit-card swipe fees collected from merchants by banks with more than $10 billion in assets. Those fees had generated $19 billion in revenue for banks in 2009, according to the Nilson Report. The expected loss in revenue from the cap is why Bank of America and Wells Fargo say they've imposed or tested user fees.
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That is a lot of money to operate such a network. I understand it is not all profit, that it's just revenue. But I don't think that they take a loss on the operation. Card payment networks have been in place for years, these are mature operations that don't have startup costs, communication costs for other similarly large networks, cell phones for example, have gone down.
Also, this aspect of the law is only for operations that have more than $10 billion in assets. Meaning that for a smaller bank, these caps on interchange fees don't apply. For all the hullabaloo surrounding the importance of helping small businesses. Well, this is exactly that. Compared to banks that have more than $10 billion dollars that is. Apparently my understanding of what constitutes "small business" needs some recalibration.
The banks subject to the restriction, they'll try to recover the revenue no longer available to them via the interchange fees, exactly what BofA is doing. I see this as an example of how we can make rules that correct the enormous imbalance that is currently in favor of BIG MONEY. Money attracts money, and this one change flies in the face of that.