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The Durbin Effect

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2012 Shopping Study

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Two Years Later, Consumers Still Not Benefitting from Durbin Amendment

Comparative Analysis Shows 81 percent of Stores have Raised Prices or kept them the Same

October 1st marks the two-year anniversary of the implementation of the Durbin amendment and, as predicted by economists, academics and analysts, new research shows that retailers continue to hold on to the $8 billion annual windfall they received from Congress, without passing those savings along to consumers. Despite retailer promises of lower prices, 81 percent of stores raised prices or kept them the same in the last year, and many raised their prices far above the rate of inflation. The research also shows that consumers paid on average 4.3 percent more at stores where prices increased.

Survey findings include:

  • The price of milk at a Walgreens in San Francisco, CA has increased by $0.30 in the last year.
  • The cost of peanut butter at a 7-Eleven in Boston, MA has increased by $0.20 in the last year.
  • A hammer in Portland, ME from Home Depot has been $4.98 since before the implementation of the Durbin amendment in 2011.
  • A Slurpee from 7-Eleven in Washington, DC has cost $1.49 each year since 2011.
  • The cost of macaroni and cheese from a Wal-Mart in Washington, DC has been $1.38 every year since 2011.
  • The cost of paint from a Home Depot in Atlanta, GA has stayed the same price since last year.

Learn more about our methodology and results here. Learn More

In 2010, Congress handed retailers a gift with the Durbin amendment, a new regulation that put government price controls on debit interchange fees – what retailers pay to accept debit cards at the register. During testimony, retailers promised they would pass savings along in the form of lower prices to their customers. On October 1st, 2011, the Durbin amendment went into effect, slashing in half what retailers pay for debit acceptance. Consumers, however, have not seen the savings.

“As part of their lobbying tactics, giant retailers promised to lower prices for their customers if Congress passed the Durbin amendment. Two years after implementation, retailers have taken home an $8 billion annual windfall while their customers still aren’t seeing a discount for using debit,” said Sam Fabens, spokesman for the Electronic Payments Coalition.

To collect the data for the field research, 32 shopping trips were performed at 16 stores nationwide. Identical products were purchased at each store and compared: one shopping trip in September 2011 before implementation of the Durbin amendment; one in September 2012 – a year after the implementation of the Durbin amendment; and one in September 2013 – two years after the implementation of the Durbin amendment.
These higher prices for consumers come as retailers save billions and debit card issuers are forced to make up for lost revenue. Consumers are paying more for traditional banking products and services and not even getting any reduction at the register to help ease the pain.

A recent paper published by the University of Chicago Law School reports that the average monthly maintenance for noninterest bearing checking accounts increased by 25 percent from pre-Durbin rates to $5.48—an all-time high. The paper notes that the rise in these costs is, in part, a result of recent regulations limiting overdraft fees and capping the cost of debit card interchange fees.