The Center for Public Integrity

UPDATED June 29, 2011 - The table of fees below was updated with revised survey data issued by the Federal Reserve. Several card networks corrected their previously provided data, the Fed said, which cut the overall average fee for prepaid cards to 40 cents, from the Fed's previous figure of 50 cents.

Exactly how much it costs big U.S. banks to process a Visa or MasterCard debit card transaction has long been murky – until the Federal Reserve surveyed the industry a few months ago and came up with a figure of 12 cents per swipe.

The processing fee is set by card networks such as Visa and MasterCard, which typically issue confidential fee schedules to member banks twice a year. The card networks -- not the banks -- decide how much banks can collect from retailers each time a shopper swipes a debit card to pay for a purchase.

The Fed sought to get a clearer sense of the actual processing costs by surveying large banks that issue debit cards, payment card networks, and banks used by retailers.

Survey responses revealed a significant gap between what banks collect each time a customer swipes a debit card -- an average of 44 cents -- and what it costs the bank to actually process the purchase. The data also showed that banks are collecting nearly twice as much to process signature-based debit cards compared to PIN-based debit cards.

The Fed included in its calculation expenses for authorization, clearance and settlement. Banks argue the Fed ignored system-wide costs such as security, customer service calls, and cardholder rewards programs. 

Lobbyists for a range of business interests are trying to dilute, delay or derail regulations required by the financial reform law. Here's a look at Congressional hearings, rulemaking deadlines and other Dodd-Frank law events scheduled this week.

Monday, April 25

Credit ratings — Securities and Exchange Commission deadline for public comments on its proposal to set a standard of credit-worthiness to replace references to credit ratings in agency rules and regulations.

Swaps repository — Deadline set by the International Swaps and Derivatives Association for proposals to create a global repository to record all commodity over-the-counter derivatives trades beginning in January 2012.

Wednesday, April 27

SEC meeting — The Securities and Exchange Commission meets to discuss whether to propose joint rules with the Commodity futures Trading Commission about the definitions of “swap” and “security-based swap” as well as recordkeeping requirements. The SEC will also consider whether to remove credit rating references in existing agency rules. Meeting begins at 1000 ET.

CFTC meeting — The Commodity Futures Trading Commission meets to discuss capital requirements for swap dealers and major traders, and protection of cleared customer contracts. Meeting begins at 0930 ET.

Fed press conference — Federal Reserve Chairman Ben Bernanke holds the first quarterly news conference after the Fed's Open Market Committee meeting to set interest rates. News conference begins at 1415 ET.

A former top Securities and Exchange Commission official today urged the regulator “to get serious about enforcement” and questioned why senior Wall Street and accounting firm executives have gone unpunished for their role in the financial crisis.

“Is the SEC a lapdog or a watchdog?” asked Lynn Turner, a former SEC chief accountant who left in 2001, in testimony before a Senate panel examining the role of accounting firms in the financial crisis.

Turner also criticized the Financial Accounting Standards Board (FASB), which sets rules and standards that guide auditor actions, for failing to issue “timely standards” on off-balance sheet transactions like Repo 105. That was the accounting trick Lehman Brothers used to park as much as $50 billion a quarter overseas to fool investors about its true leverage.

“The FASB has a very diluted mission and objective of trying to serve all auditors, financial management who prepares financial statements, as well as investors,” Turner said in his prepared testimony. “When one is tasked to serve all, it often results in none being served.” 

The SEC has brought dozens of market crisis-related cases since 2008, which have yielded some big settlements, including the record $550 million that Goldman Sachs agreed to pay last year after the investment bank was charged with lying to investors about a subprime security. But regulators have yet to pursue any civil or criminal actions against the firms or audit partners who signed off on financial statements of the dozens of banks that later went bankrupt or required a government bailout.