It is one year now since it came into force –
but the Durbin Amendment still sparks dispute among those affected
by its provisions.
The Durbin Amendment came to the forefront
once more in mid-June when eighteen conservative think tanks sent a
letter to the US Congress calling for the repeal of this
legislation.
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The National Tax Limitation Committee, the Institute for
Liberty, ConservativeHQ.com, the Club for Growth, the Faith and
Freedom Coalition, or the Maryland Center-Right Coalition are among
the signatoriesof the letter.
In the letter to the Congress, the eighteen organisations said
that the Durbin Amendment does not cover the costs of debit card
transactions, which are being passed on to consumers.
They also said there is little evidence to support the claim by
retailers that the new regulation has brought about savings for
consumers.
The group expressed in the letter:
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By GlobalData “The solution is the free market. Let banks, merchants and
payment card networks work out interchange fees in a system of free
and voluntary exchange.
“Repealing the debit card interchange price caps entirely and
getting the government out of the way is the only way to restore
balance in this market.”
In related news, the Merchants Payments Coalition said in a
statement that they support the Durbin amendment because it has
prompted more transparency and competition on debit-card swipe
fees.
The Merchants Payments Coalition said:
“American merchants pay the highest swipe fees
in the world, and for many card fees are their second-highest
operating cost”.
The coalition added that the money saved by
the Durbin regulation lowers merchants’ overall operating costs and
allows them to offer lower prices to consumers.
Doug Kantor, counsel to the Merchants Payments
Coalition said:
“Now we need to bring competition and
transparency to credit cards, too, to give some relief to consumers
and main street businesses from the dysfunctional, anti-competitive
credit card market.”
The Durbin Amendment added a section to the
Dodd-Frank Act 2010, a federal statute aimed at bringing about
comprehensive reforms in the US financial system.
The amendment mandates that the amount of any
interchange transaction fee that card-issuing banks can collect
with respect to an electronic debit transaction must be
proportional to the cost incurred by the issuer with respect to the
transaction.
Caps on the fees that issuers generate from
debit card purchases took effect in October 2011, reducing revenue
for large banks by as much as USD6.6bn annually, according to a
report from Javelin Strategy and Research.
