Visa, MasterCard: Financial Losers

NEW YORK (TheStreet) -- In the aftermath of the Federal Reserve's final ruling on the limit to interchange fees required by the Durbin Amendment, the credit card processors on Thursday gave back some of the ground they gained at the end of the previous trading session.

After seeing its shares rocket forward 15% Wednesday, Visa saw its shares give back 3% during Thursday's session, to close at $84.26. After rising 9% Thursday, MasterCard also pulled back 3%, to close at $301.1 Thursday.

The credit card processors had zoomed ahead Wednesday on word that after a bitter industry outcry against the Durbin Amendment of the Dodd Frank Wall Street Reform and Consumer Protection Act -- signed into law by President Obama last July -- the Federal Reserve would increase its proposed cap on interchange fees charged to by large banks to merchants to process debit card purchases from 12 cents to 21 cents per transaction.

The final Durbin rule also adds "5 basis points multiplied by the value of the transaction" to the 21 cent cap, salving the wounds to bankers concerned that they wouldn't be sufficiently compensated for large debit card transactions. The Fed also announced an interim rule adding another kicker to the interchange fees, with "an upward adjustment of no more than 1 cent to an issuer's debit card interchange fee if the issuer develops and implements policies and procedures reasonably designed" to enhance fraud prevention.

So, when combined with the maximum allowed interchange fee, including the 5 basis point and the maximum penny adjustment for the compliance with enhance fraud prevention standards, a large bank can "receive an interchange fee of up to approximately 24 cents for the average debit card transaction, which is valued at $38. " That's a decline from an average interchange fee of 44 cents per transaction, charged by banks during 2009, according to the Fed.

Moving away from the world of card processing fees, the broad indexes were strong on Thursday, with investors cheering the Greek parliament's passage of an implementation plan for the austerity law passed the previous day, both as prerequisites for a €110 billion ($159 billion) loan package from the European Union and the International Monetary Fund.