Thursday, February 17, 2011

Durbin is still an undecided process Rules still pending

I know, I know.  Reading the WSJ and keeping up with the Durbin amendment seems to be beyond our daily reach.   But it can and will affect how you and I transact payments in the future.

The impact could be as simple as no change to the consumer in terms of cost, but meaningful in terms of knowing your costs....

"The Journal said a report by the Center for Responsible Lending, a nonprofit research group, concludes that new credit card rules made billions of dollars in charges more transparent, which should help lower costs over the long-term."

The bigger issue is the obfuscation of what the charges are for.  Credit card Associations are calling this a fee for the use of the card.  But few consumers actually understand the process or how the costs are incurred and then passed on.  It's kind of like my complete ignorance of how wheat costs are determined.  I sort of know what goes into it, but couldn't really measure it.  I just know how much flour costs.

But cards are different as they will soon replace cash all together. And then you no longer have a choice of how to pay.  If consumers don't have a choice, then it is a monopoly, no matter how many logos appear on the face of the card.

I don't have a magic answer, I just know that the balance of the consumer and the industry - as well as the banks- is askew.  It is our job to pay attention and to write our opinions to Congress and to the cards and banks.  Lack of actgion today, will have consequences tomorrow.

I will try to keep up with this issue and keep you posted as well


Post personal-finance columnist Michelle Singletary weighs in on the banking lobby's effort to roll back the Durbin rule. From the consumer's perspective, "we can't win this fight. Even with lower swipe fees, there's no guarantee that merchants would lower retail prices to reflect the break they would be getting. I have a wild and wacky idea. What if we just went back to using cash? ... Our rebellion against electronic payments would show merchants and financial institutions that we still have some economic power. We don't have to be damned whichever way this debit battle goes."