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Post Info TOPIC: PayPal warily eyes the Fedís forthcoming debit card rule


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PayPal warily eyes the Fedís forthcoming debit card rule


PayPal warily eyes the Feds forthcoming debit card rule

A proposed maximum debit card interchange fee could hurt its finances, PayPal says.

The Federal Reserve Board accepted its final comments this week on a proposed debit card rule that could have a major impact on PayPal as well as on merchants and banks.

The rule would restrict debit card interchange feesthe fees merchants typically pay to card issuersto a maximum of 12 cents per transaction, which would slash the current fee structure and have major ramifications for both merchants and banks.

Its less clear, however, how the rule might impact PayPal Inc., the online payment services unit of eBay Inc. PayPal pays online merchants when consumers with PayPal accounts make purchases, and consumers load those accounts with value using debit or credit cards or other forms of payment. PayPal earns revenue by charging merchants a percentage of the purchase transaction value, typically about 2% to 3% plus a fixed fee of about 30 cents. Thats at least $2.30 on a $100 online order. If the Fed determines that such a fee structure can be defined as an interchange fee, PayPal could be subject to the 12-cent maximum, dramatically reducing its revenue.

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