The debit card industry's big names are modestly rebounding this morning, after being hit hard yesterday from the Durbin Bill. Yesterday, Visa Inc. and MasterCard Inc. plunged more than 12 percent in New York trading after the Federal Reserve Board proposed rules that may slash debit-card interchange fees by 90 percent.
Shares of Mastercard, Visa , & American Express are all rebounding this morning, with Mastercard and Visa up a little over 1%. Shares of Mastercard and Visa particualrly were hit yesterday, both down around 10% on concerns that the Durbin Bill would hit earnings for these companies.
The U.S. Federal Reserve yesterday released its draft proposal for debit interchange rules and is now soliciting public comment.
The Board is requesting comment on two alternative interchange fee standards that would apply to all covered issuers: one based on each issuer's costs, with a safe harbor (initially set at 7 cents per transaction) and a cap (initially set at 12 cents per transaction); and the other a stand-alone cap (initially set at 12 cents per transaction). Under both alternatives, circumvention or evasion of the interchange fee limitations would be prohibited. The Board also is requesting comment on possible frameworks for an adjustment to the interchange fees to reflect certain issuer costs associated with fraud prevention.
Comments on the draft proposal are due by February 22, 2011. The draft rule proposal also includes an interesting summary of industry feedback the Fed gathered through is outreach program.
