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Swipe Fees Pose 'Double Whammy' on Econ: Analyst
CNBC.com | March 09, 2011 | 12:42 PM EST

"Swipe" fees imposed by the Senate's Durbin Amendment will pose a "double whammy" to small banks and consumers, ultimately hurting the US economy, Adam Frisch, Morgan Stanley Equity Research, told CNBC on Wednesday.

"15-20 percent of US GDP travels over debit rails - and that's plain percentages of consumer spending - and if banks can't make money on this product anymore, there's going to be a lot of disruption there," he said.

Lower to mid-income level consumers are going to "get crushed by these fees," he went on to say, and they don't want or don't have access to credit cards.

"If you disrupt their use of debit cards, that amount of disruption will translate into spending at some point," he added.

Small banks that are less diversified than larger counterparts like JPMorgan, he said, rely more heavily on interchange revenues and higher fees would inhibit their ability to lend to consumers.

As a response, banks are going to create new products or encourage people to buy on credit, said Frisch. He is bullish on Visa and Mastercard .

"There's no reason for banks to offer a product where they don't make money," he said. "And when you take a system like payments...and you take one linchpin out, a lot of ramifications happen here."

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