Americans could soon be hit with new banking fees -- the result of a Senate vote on Wednesday in a battle for billions of dollars between merchants and banks.
The merchants won in the 54-45 Senate vote to cap the fees that banks charge each time a consumer swipes their debit card.
On July 21, the Federal Reserve will issue new rules that will reduce the average 44 cents that banks charge for each debit card transaction.
That fee, typically 1 to 2 percent of each purchase, produces $16 billion in annual revenue for banks and credit card companies, the Fed estimates. Now banks will be get less money from those transactions.
Victorious merchants said the lowered fees should allow them to drop prices. But banks said they could be forced to boost charges for things like checking accounts to make up for lost earnings.
Edmund Mierzwinski, consumer program director for US PIRG, which represents state public interest research groups, said some banks might curtail the rewards programs that many attach to their debit cards, such as awarding cash back or airline miles.
But he said checking account fees would not rise.
"There will be competition," Mierzwinski said. "Banks will be forced to come up with innovative ways to lower costs in their card networks."
Camden R. Fine, president of the Independent Community Bankers of America, challenged that statement, saying the Senate vote would mean that "consumers of lower socio-economic status will get hammered" because bank fees would rise.
"Where do people think banks get the money to subsidize these products" like free checking accounts, he said.
He also challenged assertions that stores would pass the savings from lower fees to customers.