There’s a very busy agenda in Washington, D.C. today for the payment industry as it attempts to draw attention to the unintended consequences of the debit provisions of the Dodd-Frank law.
In addition to Josh Floum’s testimony before the House Financial Services Subcommittee, Chairman Bernanke just offered his own blunt assessment of the proposed “carve out” for smaller financial institutions:
“We are not certain how effective that exemption will be. It is possible that because merchants will reject more expensive cards from smaller institutions or because networks will not be willing to differentiate the interchange fee for issuers of different sizes it is possible that the exemption will not be effective in the marketplace.”
We think the Chairman’s concern is both 100% warranted and a significant development in this debate, reflecting similar concerns voiced by our own CEO in a recent op-ed in the American Banker.