Felix on debit interchange fees.

Post #340,452 by Another Scott 3/13/11 8:58:13 AM Reply	Felix on debit interchange fees. http://blogs.reuters...ther-on-payments/ It's well argued and a good read. However, the same principle could be applied to many or most regulations - make them based on principles, not on explicit rules written by Congress. Let the technocrats who work in the trenches make the decisions and write rules based on broad principles in the law as the world evolves. Congress isn't going to give up that power easily - they extract their own rents that way (among other things)... Cheers, Scott.
Post #340,588 by jay 3/16/11 7:52:14 PM Reply	Re: Felix on debit interchange fees. However, the same principle could be applied to many or most regulations - make them based on principles, not on explicit rules written by Congress. Let the technocrats who work in the trenches make the decisions and write rules based on broad principles in the law as the world evolves. That used to be the case, at least to a greater degree then it is today. An intersection of problems caused Congress to start detailing every little bit into the law, and now it's habit. A habit that is pushed by lobbyists who don't want to risk the technocrats actually producing sensible and enforceable regulation. Jay
Post #340,593 by static 3/16/11 9:57:49 PM Reply	A similar battle has been brewing in Aus. Fortunately, our regulators have more and larger teeth, but still, it's a close thing. One of the more visible and odious ones is ATM fees. For a long time, only your own bank could charge you a fee for using someone else's ATM. Keeping this low was self-enforcing because if your bank charged you too high a fee, you could take your business elsewhere. Banks often had interchange agreements so you could use one or two other bank's ATMs for free. Recently, the law changed to allow the ATM operators to charge a fee. Which customers see at the point they withdraw cash. Fortunately, they have to ask and I wonder just how many people say "No, thanks" and go find an ATM of their own bank. I tend to not even try. We've also had arguments between banks et al about interchange fees for EFTPOS transactions. Merchants don't pass on the EFTPOS fees, but they have been allowed to pass on the credit surcharge for some while now (smaller merchants do but larger ones don't). It should be an incentive for credit card providers to lower their surcharge, but I don't see it happening. Instead, it's all shifting to charge almost anytime we want to use our own money. :-/ Wade. Q:Is it proper to eat cheeseburgers with your fingers? A:No, the fingers should be eaten separately.
Post #340,630 by jay 3/17/11 11:15:22 PM Reply	We lost on ATM fees a while back In the US you generally pay through the nose to use other banks ATMs. The smaller banks have formed networks of shared ATMs, but if your away from home it can be hard to find one. It's particularly galling because the banks actually pay each other to use the ATM network, so it doesn't cost the banks anything. It's just an opportunity for easy profit, so they all run the fees up as high as they can get away with. I've seen ATMs at casinos that charge as much as 10% of what your taking out. Take out $100 dollars and your paying $10 dollars in fees. There is actually a simple way around it though. Because transactions are paid by the banks, it costs you nothing to buy things with debit cards and you can get change on these transactions. So when I need cash and I'm not near a bank I can use, I hit a supermarket and buy one bottle of soda. A lot of people are not aware of that or realize that you can use change to avoid paying bank fees. The problem with banking is that it's so inconvenient to change banks. For a lot of people, if they change banks they also need new credit cards and their salary direct deposit will have to be redone and so on. It's a huge hassle, so people don't do it unless a bank really annoys them. The big banks don't have to have attractive policies because they don't grow by attracting customers really, they grow by buying smaller banks. I don't know how it is in Australia, but in the US it's a constant cycle. All of the big banks slowly loose customers to smaller banks. So they constantly buy smaller banks, knowing that most of the customers won't change banks until they are personally hosed by the big banks policies or have some other good reason to change. Jay
Post #340,631 by static 3/18/11 2:00:00 AM Reply	We have some fundamental differences. The big one is that we have almost no regional banks: almost all our banks are national and four of them have more than 85% of the market. The others basically fight over the scraps. Some of the growth has happened by big banks buying small banks, but the regulators and central bank both have more teeth than their US counterparts. This does mean that most of the population has a good chance of finding an ATM of their bank wherever they go in Australia. ATM fees to customers is actually fairly recent. The Reserve Bank changed the rules only two years ago so that ATM operators charge the customers directly (and must ask) instead of their bank. It has encouraged more ATMs, but the competition hasn't lowered the fee. Most of them charge $2, but a few charge a little more. The Reserve Bank is looking at ways of forcing ATM operators to lower it. Doing a cash-out when an EFT purchase is made (i.e. via debit card) currently attracts no fees, but some merchants have floor limits. And it's what people recommend if you can't stomach an ATM fee and can't find the right one. Some articles in the SMH about it: http://www.smh.com.a...+fees&ss=Business Wade. Q:Is it proper to eat cheeseburgers with your fingers? A:No, the fingers should be eaten separately.

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