With the passage of the financial overhaul bill, Congress has given the Federal Reserve the power to limit interchange, or "swipe," fees. Those are the fees a merchant's bank (the acquiring bank) pays to a customer's bank (the issuing bank) when merchants accept cards using networks such as Visa and MasterCard for purchases. The Fed has nine months after the bill becomes law to determine what is "reasonable and proportional" for those fees. Depending on what costs are considered to be fundamentally part of the transaction process, "reasonable and proportional" could take on new meaning, with serious unintended consequences for most players in the payment processing value chain. In the end, the companies that have the wherewithal to offer and maintain in-store credit cards will be the big winners from the bill--not the consumer or the small merchant.
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