(“How To Help The Unbanked? Repeal The Durbin Amendment,” August 4, 2014)
What has been the Durbin Amendment’s effects? Two-and-a-half years after the Durbin Amendment’s implementation the evidence is in: According to a new study we authored for the International Center for Law and Economics, we found that consumers are paying more and getting less as a result of the Durbin Amendment, and that low-income consumers have suffered the most.
("Capping fees on card transactions has not worked out as planned," October 2, 2014)
But the limits on “interchange fees”, as the financial jargon has it, have not worked out as planned. They have resulted, by one calculation, in the transfer of between id="mce_marker" billion and $3 billion annually from poor households to big retailers and their shareholders. These were not the beneficiaries Mr Durbin had in mind when the amendment came into effect three years ago this week. Stores accept cards to increase their sales. Both the bank that issues the card and the one that handles the retailer’s account charge them a small fee for the privilege, as does the card network—an arrangement often criticised as opaque and anti-competitive. American banks, Mr Durbin claimed, took in more than id="mce_marker" billion a month from such fees. The rules implementing his amendment capped interchange fees for most transactions at 21 cents plus 0.05% of the sum charged—a 45% cut. Retailers, Mr Durbin assumed, would pass the resulting savings to consumers.
(“The Real Victims Of New Debit Swipe Fee Rules? Consumers, Not Banks,” August 1, 2013)
Retailers have argued that a drop in the amount banks can charge them for swipe fees would mean lower costs for consumers on the price of goods. But don’t hold your breath because that never really happened the first time the Fed put a cap on swipe fees. In the end, the consumer loses.
U.S. Senator Jim DeMint
(“How Senator Durbin raised transaction fees,” November 1, 2012)
Senator Durbin would prefer Parkmobile to blame companies that issue debit cards. But, indeed, it was Dodd-Frank, the so-called Wall Street reform legislation, and Senator Durbin’s amendment to Dodd-Frank, which capped “swipe fees,” that caused debit card transaction fees on lower-priced items to rise.
(“Parking Fee Hike Gets Caught Up in Interchange Fight,” October 31, 2012)
Parkmobile USA, a mobile payments company with an exclusive contract for DC municipal parking areas, is fielding sharp criticism from backers of the so-called Durbin amendment after telling users that a new customer fee hike was the result of the provision in the Dodd-Frank Act.
(“Does law hurt or help banks, consumers?,” July 10, 2012)
The Durbin Amendment began with the best of intentions: it would take an overinflated charge that disproportionately impacts the poor and small businesses, and rein it in to reasonable levels. However, its end effect was to worsen conditions for both groups
San Antonio Express-News
(“Debit Fee Dip Backfires on Consumers” May 18, 2012)
That means merchants no longer are paying more than $8 billion a year in higher interchange fees. Are they passing the savings on to consumers? “I doubt it,” said Cardhub.com CEO Odysseas Papadimitriou said. “They are just pocketing the majority of this.
(“‘Mind-Boggling’ Card Fees at the Pump: $2 Per Gallon,” April 26, 2012)
Current prices at the pump don’t seem to be delivering the savings regulators hoped would result from interchange caps to end users. Indeed, some reports have argued that certain groups of merchants are enjoying massive “subsidies” from swipe fee regulation, and that none of the value is being passed on to consumers.
AOL Daily Finance
(“Gas Stations are Hosing Debit Card Users at the Pump,” April 17, 2012)
Feel like you’re getting gouged at the gas pump amid rising prices? You actually are if you’re using a debit card.
(“Gas Stations are Paying Less, So Why Aren’t You?” April 17, 2012)
But, instead of passing along those savings to consumers in the form of discounts to those paying with a debit card, gas retailers are pocketing the difference to the tune of a billion dollars a year.