Banks pushed hard to narrow the number of card exchanges to just one — so no matter which bank we go to, we don’t really have a choice any more as to what the fees will be. The existing banks worked hard to get the Government to issue onerous regulations to prevent new card exchanges from appearing in the market. They worked hard to prevent credit unions and savings and loan companies from offering the same transaction services as banks — while I have infinite electronic transaction rights at a bank, I am limited to six per month at my credit union. This is collusion in monopoly does not win the banks me as a friend.

Anyone remember “free checking”? Why were the banks able to offer an unlimited number of free transactions as long as you kept a certain amount on deposit at the bank? The answer is obvious — the bank was making more than enough money off of your deposit to both pay you the interest on the deposit and to cover the transactions costs of your checking account.

The banks worked hard to get you to give up paper checks and move to debit cards, claiming that the lower costs of electronic transactions would translate into both increased profits to the bank and improved services to the customer.

As they did so, they also worked hard to limit their liability for debit card scams — debit cards do not have the consumer protections that credit cards do — a bank is not obligated to return money to a customer who has had it stolen via debit card scams.

I used to use my debit card in many places, but the writing was on the wall with the ATM fees and such, so now I use a credit card for everything, and pay the balance to zero each month. The banks don’t charge me a thing (I keep an account filled up with the money they demand for a charge-free credit card), and I get scam protection, I get 3% back on my purchases at the end of the year, and I get an extended warranty on the purchase as well as the ability to deny payment to a merchant who fails to deliver that which they advertised. None of these are available with a debit card, which really functions exactly like a paper check.

I just want to see bankers poorer even if it cost all of us a little. justice comes with a price on this one.

nathor on December 1, 2012 at 6:14 PM

Wow. Will you be the one in the front rank waving a huge red flag?

GWB on December 1, 2012 at 11:38 PM

Nathor has a point. If these banks stood on their own within the free enterprise model, then I would say that if you don’t like how they do business, then don’t do business with them (I recently got rid of my BOA Visa card that I’ve had for more than 25 years).

The problem is that BOA and other banks are so tied in to our government that it’s a quasi-socialist model. Remember, these are one of the “too big to fail” banks, and if they went under, one of the other TBTF banks would take over and do the same stuff all over again…all with the blessings and assistance of Uncle Sam.

Oh, that’s right…we bailed them out.

Never mind.

I am a retailer, and I absolutely did NOT love it. The reason? The credit card processers immediately found a way to make up for the loss of some of that revenue. At the cost of only $59.95 per year, I now have the privilege of taking a required self-administered security check test of how well I control my employees’ access to any credit card info my business has. I also can’t wait to see what other goodies Dodd/Frank has in store for me both as a retailer and a consumer.

catsandbooks on December 1, 2012 at 5:45 PM

This!! I am the administrator for a small nonprofit. We aren’t even smart enough to cheat. In switching credit card processing companies we got stuck keeping two processing accounts active, and had to pay this same $60 fee twice for the same silly little credit card machine.

Dodd/Frank are more like Butch and Sundance.

STL_Vet on December 1, 2012 at 6:31 PM

I actually manage the credit card processing dept at a community bank and know more than any sane person would want to about the Durb amend and fee cap.

The security check fee the first poster referenced (PCI SAQ) was around before the fee cap and is in no way mandated by the government or banks. That one is all on visa and MasterCard. I agree it is a tremendous nuisance but you should be able to find a processing provider that charges less than $60 per year to help you with that (or in my banks case- nothing at all). I would recommend finding a new company.

The second poster shouldn’t have to pay anything either. There are tons and tons of processors (a lot of bad ones too) so be sure to do your homework and ask for 5 local businesses that have used their service more than a year. Also go with someone local like a community bank. They are more accountable ifs they try to hit you with those fees.

Now all that said- there was a fee recently implemented that was a direct cause of the cap. It is called the Visa FANF (fixed acquirer network fee). It is a monthly fee charged based on the volume of “not present” transactions a business runs in a month and number of locations and can range from $2.9 per month to $30000. Most small biz I help are getting a new $9-$15 monthly charge from FANF. The $30k is for companies like amazons size… But that’s per month.

Govt interference (in this case with help from large corps) end up costing everyone else more yet again.

I am not coherent here in the solutions, I know, but I am angry

nathor on December 1, 2012 at 7:22 PM

That’s quite enough Nathor, thank you.

Ladies and Gentlemen. Have a good look at that quote. This is what you have to evaluate, adapt, and overcome.

I just want to see bankers poorer even if it cost all of us a little. justice comes with a price on this one.

nathor on December 1, 2012 at 6:14 PM

Wow. Will you be the one in the front rank waving a huge red flag?

Now $59.95 may not sound like a whole heck of a lot, but I am a really, really small retailer and it is a big deal if I am forced to fork it over during one of my frequent financial crises.
catsandbooks on December 1, 2012 at 5:45 PM

This response is very late (I’m a retailer too, antique store, and am just now getting home) so you may not see it.

I have had to take the idiotic “compliance test” also. What a freaking joke! You just answer yes, duh. In any case, I have never had to pay a fee to take the test just the non-compliance fee of $20/mo. You need to tell your processor to waive that fee or else you will find a new processor. And if your biz calls are anything like ours, every other sales call is some jerkoff trying to get you to switch cc processors! And if you have a contract, just tell them that the new people you have been talking to are willing to buy out your contract because many of them will.

Good luck! In this freaking economy we all need it!

i had to go away for a while, so didn’t respond. nathor, you are the tail of a wagging dog. The dog is not capitalism. What you are upset about is an heavily regulated industry that was constricted into the march toward social justice

the dog nathor is state-run capitalism…for the people.

lets go somewhere simpler. Ethanol gasoline in small engines. that does damage…and people get unhappy with the results. so if you go to the web you will find some people blaming the oil industry…because it is NOT ethanol, it is the catalyst that makes the blend work.

well, no. The problem is that local, state, federal governments have mandated ethanol. that’s the reason. but it is easier to blame Industry for my small engine to need repair.

think this way…we are in a post-capitalist era. No oil company is going to sell you something that screws up your engine. Bad for business…right?

No bank is going to give out bad loans…unless someone has a gun to their head.

i’m surprise you haven’t brought up Glass-Steagall. Well, just in case you were wondering

“Today, Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century,” then-Treasury Secretary Lawrence H. Summers said at the time. “This historic legislation will better enable American companies to compete in the new economy.”

But 10 years later, the end of Glass-Steagall has been blamed by some for many of the problems that led to last fall’s financial crisis. While the majority of problems that occurred centered mostly on the pure-play investment banks like Lehman Brothers, the huge banks born out of the revocation of Glass-Steagall, especially Citigroup, and the insurance companies that were allowed to deal in securities, like the American International Group, would not have run into trouble had the law still been in place.

“Commercial banks played a crucial role as buyers and sellers of mortgage-backed securities, credit-default swaps and other explosive financial derivatives,” Demos, a nonpartisan public policy and research organization, wrote in a report discussing the problems it said were caused by the repeal of Glass-Steagall.

“Without the watering down and ultimate repeal of Glass-Steagall, the banks would have been barred from most of these activities,” Demos said. “The market and appetite for derivatives would then have been far smaller, and Washington might not have felt a need to rescue the institutional victims.”

Today, President Obama seems to have softened his views a bit when it comes to Glass-Steagall. The administration’s proposal for overhauling financial regulatory system makes no mention of resurrecting the firewall between commercial banks and investment banks and still allows insurance companies to deal in securities. The change of heart may have something to do with the fact that one of his senior economic advisers is Mr. Summers.

http://dealbook.nytimes.com/2009/11/12/10-years-later-looking-at-repeal-of-glass-steagall/

so what to do?…well, first of all lets start by talking about the deep corruption of the Dem part…and their Failures.

they are not your friends nathor

but lack of regulations would allow investment banks that are by nature, very large, to invent new things to screw the economy like the CDS’s that goldman sachs created.
your solution of deregulation the financial markets in the hope that small banks would take business from big banks while allowing those same big banks( who now really dominate the market) to completely screw the economy again seems a bit of a fantasy. I dont think this is the solution.

nathor on December 1, 2012 at 7:55 PM

Real simple. If the big banks screw up, don’t bail them out. That’s the way the free market works. If those banks know that they won’t be receiving any handouts if they make risky decisions that turn out badly, they start being more conservative and discerning in the actions they take.

if there was a law that broke up the big banks AND privatized freddy and fanny, would it be ok with you?

nathor on December 1, 2012 at 7:37 PM

Others have pointed out the solution to the big bank problem. Divesting freddie and fannie are the right thing to do. Those entities should never have existed to begin with and were a contributing cause to the housing & mortgage crash that have led to the current economic conditions.

Try this, instead; repeal the damnable regulations that create the environment where it’s hard to be a small/local/community bank.

Then, smaller, more responsive banks can open, and thrive, taking customers from the big banks, which become smaller, and, of necessity, more competitive/responsive.

You’re short on solutions because you choose not to see a solution.

massrighty on December 1, 2012 at 7:44 PM

but lack of regulations would allow investment banks that are by nature, very large, to invent new things to screw the economy like the CDS’s that goldman sachs created.
your solution of deregulation the financial markets in the hope that small banks would take business from big banks while allowing those same big banks( who now really dominate the market) to completely screw the economy again seems a bit of a fantasy. I dont think this is the solution.

if there was a law that broke up the big banks AND privatized freddy and fanny, would it be ok with you?

nathor on December 1, 2012 at 7:37 PM

Fanny and Freddy need to find a room..
.
.
You and you only need to be the judge of what is right when it comes to investing..or banking..

Take the blinders off..

Turn off that TV..

if there was a law that broke up the big banks AND privatized freddy and fanny, would it be ok with you?

nathor on December 1, 2012 at 7:37 PM

Try this, instead; repeal the damnable regulations that create the environment where it’s hard to be a small/local/community bank.

Then, smaller, more responsive banks can open, and thrive, taking customers from the big banks, which become smaller, and, of necessity, more competitive/responsive.

You’re short on solutions because you choose not to see a solution.

But you go ahead and keep supporting statists, eventually you’ll get enough regulations to really stick it to those big evil corporations. Of course, by that time it will be stick it to THE big corporation that has absorbed everything else before the government gobbles it up.

AZfederalist on December 1, 2012 at 7:32 PM

if there was a law that broke up the big banks AND privatized freddy and fanny, would it be ok with you?

another reason to break the big banks, its much more simple to break the banks than to scale down the government and I take the solution that is possible.

nathor on December 1, 2012 at 7:33 PM

your choice to keep indulging fantasies. have a good one.

The correct point is the opposite. Big government is in cahoots with big banks. You like one, you like the other. The converse is true as well.

22044 on December 1, 2012 at 7:24 PM

another reason to break the big banks, its much more simple to break the banks than to scale down the government and I take the solution that is possible.

this “oh, poor big banks are being bothered by big bad goverment” attitude is really a non starter with me.

nathor on December 1, 2012 at 7:22 PM

You seem to miss the points being made here. The overall sentiment here is not for “oh those poor big banks”, it is more the realization that those big banks are not going to do anything that causes them to lose money. When new regulations are implemented, it is the banks’ customers who will pay for the implementation and execution of those regulations, not some magical stash that the evil big bank is just sitting upon. … and you see, all those regulations, pushed by the politicians you love? The big banks are able to raise their fees, etc. to recoup the fees. The smaller banks? They can’t do so because the big banks set the market price and are able to absorb the regulations at a lower per account cost than the small banks due to the size of the big banks; the smaller banks have to adapt to the market price and are thus squeezed until they are forced out of business.

So all that regulation that you love? It’s giving the big banks the opportunity to get even bigger while forcing the smaller banks out of business.

But you go ahead and keep supporting statists, eventually you’ll get enough regulations to really stick it to those big evil corporations. Of course, by that time it will be stick it to THE big corporation that has absorbed everything else before the government gobbles it up.

If you are upset at the libor bru-ha-ha then you must really be incensed at the FED’s QEs. Neither are right but the FED is literally destroying are currency before our eyes and it is perfectly legal.

chemman on December 1, 2012 at 6:50 PM

there is still a bit of Keynesian in me…

I am not coherent here in the solutions, I know, but I am angry and want something done and this “oh, poor big banks are being bothered by big bad goverment” attitude is really a non starter with me.

nathor on December 1, 2012 at 7:22 PM

The correct point is the opposite. Big government is in cahoots with big banks. You like one, you like the other. The converse is true as well.

Oh, BoA is finding ways to cope with the new regs. This month, it started charging a $10. fee to transfer funds from a designated overdraft protection account into checking.

sandspur on December 1, 2012 at 7:16 PM

Wow, that’s like charging an ATM fee to your own customers. Maybe even worse.

ok – you initially call for big government “solutions” and in the next breath you want revolution?

dude…you’re tying yourself in knots!

22044 on December 1, 2012 at 7:14 PM

I am not coherent here in the solutions, I know, but I am angry and want something done and this “oh, poor big banks are being bothered by big bad goverment” attitude is really a non starter with me.

1. Regulations brought us here; it’s doubtful that more regs will somehow fix the problem. We have evidence that, as regulations increase (along with the attendant regulatory cost,) the costs are passed to the consumer.

not more regulation, but smarter regulation, that manages to really hurt big banks ability to rip us off without hurting smaller banks. maybe its not possible, but better to try that than the status quo.

2. The government does nothing temporary; witness the tax that was recently repealed, whose purpose was to pay for the Spanish American War.

its still a hot topic but the government was recently owner of some car companies and is no more. by the way, freddie mac should be privatized.

3. we can also break up the big banks… is a statist solution that smacks of the idea that somehow, the big daddy government can spank the bank.

massrighty on December 1, 2012 at 7:10 PM

why not? better than eat shit from the big banks.

angry with all of those. so what to do?

nathor on December 1, 2012 at 7:12 PM

Go back in your mom’s basement, obviously.

nathor on December 1, 2012 at 7:08 PM

ok – you initially call for big government “solutions” and in the next breath you want revolution?

dude…you’re tying yourself in knots!