Oct. 2, 2012 – A report on the first year of implementation of the Durbin amendment on debit interchange fees shows still no signs of benefits to consumers of shifting more costs from merchants and retailers – which are key beneficiaries of the rule – to debit card issuers.
The report, prepared by the Electronic Payments Coalition, compares identical baskets of goods before and one year after the Oct. 1, 2011, implementation of the Durbin amendment. Researchers took 36 shopping trips at 18 retail locations of four major national retail brands in five diverse U.S. cities. They found no evidence that merchants have passed on any of their savings to consumers, as they said they would do, in the form of lower prices.
The report shows retailers will have netted about $8 billion a year more as a result of the reduction in the transaction fees they pay debit card issuers. Meanwhile, a survey of 169 retail executives conducted in September 2011 found that 41 percent of those surveyed had no intention of passing on the savings; 56 percent had yet to decide whether to do so.
NAFCU, a member of the EPC, argued against the debit interchange provisions when they were incorporated into the Dodd-Frank Act and urged the Federal Reserve to factor in all the costs to credit unions, banks and other card issuers of providing interchange services, which guarantee merchants immediate payment regardless of later findings of fraud or nonsufficient funds.
The Fed set that fee cap at about 21-22 cents per transaction, and the merchants are now suing for more. Arguments are slated in U.S. District Court in Washington.