Is the Cap on Debit Card Fees ‘Terrible’ for Banks?
I don’t know if Edward Yingling is the throw-a-chair type, but I might keep some distance from him today, after the apparent agreement on debit card fees yesterday broke against the American Bankers Association.
What strikes me about the debit card issue is how bankers in a knee-jerk manner look at the political loss on debit fees as counter-innovative. The conference committee hashing out a compromise financial services bill between the Senate and House yesterday agreed to cap debit card fees, and immediately Yingling blasted the political compromise. Yingling told the New York Times:
This provision remains a terrible deal for consumers, for lower-income bank customers, for government benefit programs, and for community banks.
So you’re unhappy with the outcome. Got it, Ed.
I agree the deal will take a bite out of bankers’ paychecks — but only in the near term. Debit card fees are to banks what taxes are to governments: there’s no need to sell them; they are a given. And when you think of innovation, such cash-cow businesses end up being the greatest impediment to new ideas and strategies. I understand that banks need to profit — we don’t run charities, after all. But forcing banks to look beyond innovation-less businesses for those profits isn’t “terrible,” to use Yingling’s word. “Inconvenient,” yes, but “terrible”?
Was that a chair I just saw flying by my window?
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