To me it looks like the following rule changes will remove the profitability for banks for doing reward checking accounts--so they will eliminate them. Any thoughts?
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.
The new rules, posted today by the Fed on its website, may aid retailers and cut profit for lenders who reaped about $15 billion from such charges last year. Terms outlined by the Fed include a plan with caps of 12 cents per transaction. The fees currently average about 1 percent.
The result could be an 80 percent to 90 percent drop in the fees that Visa and MasterCard pass on to banks, according to Tien-tsin Huang, an analyst at JPMorgan Chase & Co. Jason Kupferberg
, an analyst at UBS AG, said investors had been expecting a 40 percent to 60 percent reduction."