(Wall Street Journal) — Some large U.S. banks are considering allowing debit cards to bounce just like checks. Normally, if a debit transaction is approved, payment is guaranteed, since debit cards don’t bounce. But now banks are faced with new rules that will restrict how much they can charge merchants for debit transactions, erasing billions of dollars in revenue. To make back some of that money, banks are weighing whether to divide debit-card services into components and charging for them separately-known as “unbundling.” For example, if merchants want a guarantee of payment, as approved debit transactions currently offer, that would cost extra.
Unbundling would deal a blow to retailers who won a significant victory with the enactment of debit-transaction fee limits. Merchants pay debit transaction fees. While details on how unbundling may be implemented are yet to be worked out, merchants would pay a fee for the guaranteed payment feature if it is enforced. It isn’t clear if consumers will pay a penalty fee—similar to that on a returned check—for a debit transaction that bounces. In December, the Federal Reserve proposed as part of an overhaul mandated by the Dodd-Frank law capping debt-transaction fees for large banks at 12 cents, down from an average of 44 cents. A Fed representative declined to comment.