How New Swipe Fees Will Effect PerkStreet

Yesterday the Federal Reserve reduced the cap on swipe fees from the 44 cent average currently charged down to a maximum of 21 cents.  Swipe fees are the fees that merchants pay every time you use your credit card, regardless of the size of the transaction.  That's why many businesses dislike or forbid you from buying a pack of bum using your card.  The new fees go into effect on October 1, 2011.

So how might these new fees effect our friends over at PerkStreet?  My guess is that it won't have much impact.  Here's why:

  1. In order for PerkStreet users to get rewards, they have to treat their debit card like a credit card.  That is, they choose credit at the check-out and sign for the transaction.  With the vast majority of their customers heavily incentivized to swipe like a credit card, the actual number of debit card swipes for PerkStreet is probably really low.  Thus, impact will likely be minimal.
  2. On page 38 of the Federal Reserve document I linked, there were certain exclusions to the rule:  "The final rule exempts from the interchange fee standard issuers that, together with affiliates, have assets less than $10 billion, debit cards issued pursuant to certain government administered programs, and certain reloadable general-use prepaid cards."  I'm not sure what the current asset holdings of PerkStreet are, but they could be completely exempt on this reasoning alone.  However, if MasterCard is considered their "affiliate", then that thinking doesn't hold.  UPDATE (7/5/11):  PerkStreet has confirmed via email that "our banking partner, The Bancorp bank, holds under $10 billion in assets."  Thus, they will not be held to these new rules.

Either way, it's unlikely that the new debit card interchange fees will have a meaningful impact on PerkStreet or the rewards they offer.  As a reminder, if you prefer debit cards over credit cards, the PerkStreet Financial Debit MasterCard® is the only card I recommend.

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