Comments on: Why the Fed needs to replace bark with bite A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: KrisBerg Sat, 02 Jul 2011 07:14:56 +0000 Why does felix keep harping on disproven myths, sure pin debit is more secure than signature debit but they refer to two different technologies and limitations.

Felix keeps ignoring this, in the 1980s you an atm card with a pin and credit cards did not a pin because historically they used to use manual imprinting or offline transactions, the magnetic stripe then connects online transactions to approve or disapprove the card rather than calling the bank manually for the transaction or accepting.

Atm cards were used to get cash, since money is taken out of the account right away, a pin is there so if someone steals the card they can’t use it, smart right,
but credit cards never got it and they work differently.

Can you use your debit card at most online retailers no,
pin debit you cannot use, so why do most intelligent retailers assume that yeah lets use pin debit on amazon,,etc they are working on it but let me explain, a pin debit transaction is online debit- funds are taken out of the account via ach transfer, offline debit also known as signature debit or signatureless these days via contactless or if your purchase is under $25 just means that instead of taking money out of your bank account it goes through a third party network first.

With credit cards, authorization is placed to check your credit limit, much like you order something online or go to a gas station or book a flight/hotel, then you are charged, however there is flexibility because its a two-step process, the merchant can easily credit the account back,etc

With online debit, its just funds taken out and you have to use a pin each time, trouble is while most retailers in store have pin pad terminals, most other places do not, have you used pin debit online or at many establishments, no, most places have a visa or mastercard sign but not a nyce, star, sign.

Signature debit which is a convenient term allowed folks to use their bank account as their credit line, so folks who never took debit cards could simply process credit transactions to the consumer as debit, lawsuits where filed at retailers in which they did not like this because retailers far from being innocent love it when folks finance things with interest to block

Cash has costs too, would felix complain about a pin debit user subsidizing the costs back in the early 90s of theft, insurance, and travel time of cash? No, nowadays pin debit fees have risen to about 2/3s of 1 percent vs close to 1 percent of “signature debit”, however back in the 90s pin debit was maybe 7-8 cents of the dollar, thus pin debit users subsidized cash, the low fees meant retailers didn’t care for cash back.

Then again felix is wrong because online pin-less debit for small transactions and official transactions exist, you see the doj got involved because contact less or rather the ability to not have to sign for that small $10 worth of goods on your credit card was unfair so pin debit users could swipe the card and not use pin, its more complicated in that visa and mastercard bought over pin debit networks, ironically visa does have a no liablity policy for interlink.

Why exempt $9 billion bank and not $11 billion, at all, if interchange fees are a huge deal and not political windfall why exempt smaller banks, its because they don’t need the money? Who is the bark vs. small banks?

What if banks cut the amount you can spend with debit?
Would mobile payments invest if durin regulates no matter how innovated the technology is and the need for mass adoption quickly and painlessly?

As far as public utilities are concerned this is different in that there are multiple was to choose, the government has the check system where ironically if you pay your utility bill with a credit card charged extra.

In fact the government has an unfair advantage in which although checks cost money aka 30 cents on the dollar initial cost, it passes at face value, just as cash costs money , checks do too, in fact check guarantee services cost as much if not more than interchange, which is not the argument here. Of course the higher the check the less the cost as was the case of pin debit
but its unfair, emv also has its critics which is an attempt to replace traditional credit with pin and good luck using emv online the same way, also what is the point of a pin if you want to use amazon 1 check out or have your credit card on file for future billing?

I presume what visa and mastercard could do is the 3 or 4 digit security code the card unwritten, initially it was used to prevent counterfeit cards in which someone easily gets the credit card number and expiration date, since the number is just a verification its not needed to process or use the transaction, since it was never that way initially and for security purposes but retailers can check the code and if its unwritten on the card a thief wouldn’t use it a retailers that check and could block say a $2000 tv but not a $500 one.

In summary, I hope readers have gained insight not so much on the debate but the different technologies and how politics is defined not on it.

By: billyjoerob Fri, 01 Jul 2011 10:23:49 +0000 So not only does Salmon have an opinion on whether the interchange fees should be regulated, he has an opinion on what the precise level should be. The fact is the retailers can a) accept only cash (this still happens), b) not use Visa and Mastercard (Costco accepts only cash and Amex), c) set up their own network and d) look to innovations in payments to put Visa and Mastercard out of business. In other words, the free market. The banks created this whole problem for themselves when they made Visa and Mastercard public and split them off from the community banks, who have lots of pull in DC. Without any allies, they were left defenseless and Democrats like Durbin saw an easy and lucrative target.

By: fxtrader14 Fri, 01 Jul 2011 09:03:25 +0000 How about getting a central utility to ensure account to account payments are very cheap and efficient?
Not that hard, just copy what happens in Europe… The whole “we need competition because we are not socialist europeans” is utter nonsense in this case. We don’t need two water pipes or power lines into our homes, do we? So why would we need multiple banking pipes? Surely, a toughly regulated utility that would provide ac to ac transfers nationwide for free would be worth it. It would significantly reduce the toll US banks take on the real economy.

By: klhoughton Fri, 01 Jul 2011 01:56:13 +0000 ‘So let’s hope this is the end of the Fed going wobbly whenever Jamie Dimon starts having a temper tantrum. The Fed needs to show a lot more testicular fortitude going forwards, and, as Antony writes, “needs to be careful to be seen as a watchdog and not a lapdog”.’

I want a pony too. While consumers trail behind it, cleaning up any messes it makes.

By: ErnieD Thu, 30 Jun 2011 23:11:12 +0000 The primary financial lesson that the world has learned over the past four years is that both the Fed and Treasury are lapdogs for the financial industry. I had thought that Ron Paul was overstating the case for eliminating the Fed a few years ago, but he is making more and more sense with every additional action like this.

The US is unfortunately achieving a perfect trifecta: the most expensive and yet not most effective financial, health care, and education systems in the world. As a society, we are heading in the same direction as the US-based car companies went over the past 30 years for many of the same leadership, management, and entrenched interests reasons.